Bitcoin price has been falling rapidly since June 7, having generated seven daily bearish candles.
BTC has been in decline since its all-time high of $68,995 reached last November. In May, it broke below a long-term ascending parallel channel, confirming its downtrend.
Price initially bounced off the 0.618 Fibonacci retracement support level, but was rejected by the $30,000 horizontal area (red arrow), validating it as resistance.
If the downward move continues, the next support zone for BTC is at $22,000. This is the 0.382 Fibonacci retracement obtained when using a logarithmic Fib tool, as well as the resistance line of a former ascending parallel channel (red circle).
Due to these confluences, this area is likely to provide support for Bitcoin price.
Short-term price drop
The daily chart shows that price has been rising inside an ascending parallel channel pattern since May 12th. It peaked there at $31,589 on June 7.
Once at that high, it was rejected by a confluence of resistance: the $31,500 horizontal area, the middle of the relevant channel, and a descending resistance line in place since April.
Additionally, the daily RSI had generated a bullish divergence (green line) from the May 12 low. BTC’s move below the channel coincided with a drop below this trendline, another sign that the trend is bearish.
Bitcoin Wave Count Analysis
The wave count suggests that BTC is in wave C of a corrective ABC pattern (in red). The subwave count is shown in black, suggesting that the price is in its fifth and final subwave.
The short-term count presents a target close to $22,000, which is printed using the length of the first sub-wave (in white) as well as an external retracement on the fourth sub-wave (in black). This also lines up with the weekly data readings.
As for the long-term count, it is likely that price is approaching the bottom of the fourth wave (in white) of a long-term bull run, which began in December 2018.
So, once the current decline is over, another upside move to a new all-time high could still take place.
A drop below the top of the first wave (red line) located at $13,880 would nullify this possible wave count.
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