Bitcoin signals the possible completion of the correction

For the week from August 31 to September 6, the bitcoin (BTC) rate fell by 12.30%. However, during the retreat, the quotes reached an important long-term horizontal Fibonacci support, which can serve as a springboard for a rebound and reversal.

Bitcoin on weekly support

Last week, the main cryptocurrency fell noticeably, forming a bearish engulfing candlestick. During the decline, bitcoin tested the $ 10,100 support, which has acted as resistance since September last year. This level passes near the line of long-term downward resistance, broken earlier.

Technical indicators paint a predominantly bearish picture. The MACD is giving signals for a bearish reversal, while the stochastic RSI is forming a bearish crossover.

However, this intersection may not complete if price forms a bullish candlestick this week. In addition, the RSI is still above the 50 level.

Thus, negative signals on the weekly chart are not enough to confirm a bearish trend, especially since the price is above long-term support.

Short-term reversal

The daily chart shows that the price has formed several long lower wicks inside the mentioned support, which is a sign of buying pressure.

MACD, RSI and Stochastic RSI have all been at their lowest levels since the March crash, but none of the indicators are showing bullish divergence or bullish reversal.

On the 6-hour chart, the double bottom pattern has confirmed, signaling a bullish reversal. In addition, MACD and RSI are giving bullish divergence signals, while stochastic RSI has formed a bullish crossover.

In the short term, there is a chance for BTC to rise, but it is not yet clear if this will be a relief rally or the start of a new bullish move.

Wave analysis

Bitcoin likely completed the fourth wave of its impulsive five-wave Elliott structure, finding a bottom at $9825 on September 5.

If the high of the first wave of $9450 is lost, this wave analysis will lose its relevance.

You should also pay attention to the subwave y (red on the chart) to assess the completion of the correction.

This wave is realized within the A-B-C pattern (blue in the chart below). The 1.61% Fibonacci retracement level of sub-wave A is projected onto the top of wave B, which reveals the minimum target of wave C at $9885, near the bottom at $9825. A similar target is identified through the 0.382% Fibonacci retracement level relative to extended subwaves 1-3 (orange on the chart).

Confirmation of the completion of the correction will mean that the price has already started an impulsive bullish move. If the base of $9825 is lost, this wave will lose its relevance.

Alternative Wave Analysis

Wave alternate analysis suggests that price is in wave 4 while the next wave will be bearish. If so, then the price could rise to the $10,650 level, after which it will make a downside breakout and head to new lows.

However, this scenario does not converge with the 1.61% retracement target, and the new wave should be quite modest as the loss of the $9,450 level nullifies the bullish wave analysis.

So, bitcoin has either already completed the correction, or is in its final stages, and now a resumption of the bullish move is expected. If it falls below $ 9450, this wave analysis will lose its relevance.

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