Bitcoin (BTC): Don't buy Yet – Next Corrective Wave Incoming

The Bitcoin (BTC) price is in a bear flag and the short-term momentum indicators are about to turn down. This means that Bitcoin is certainly not out of the woods yet, and may even be about to make a lower low. Traders proceed with caution.

$BTC rejection about to take place?

Source: TradingView

In the 4-hour time frame it can clearly be seen that the $BTC price is moving within a bear flag. After breaking out of the downtrend (faint dotted line) the price found support at the $87,000 horizontal level and travelled along it until retesting the bottom of the flag. From there it was more or less straight up to the current position, where the price has tested the top of the flag + the $91,450 resistance level. A rejection from here is likely.

Given that the 4-hour, 8-hour, 12-hour time frames, and soon the daily time frame, are all overbought, it looks as though the next corrective impulse is about to begin.

If this doesn’t happen, and the price does break through the horizontal resistance, the next resistance at $94,400, and the top of the flag, would probably ensure that gravity reasserts itself. 

$BTC comes back to confirm breakdown?

Source: TradingView

The daily time frame reveals that the $BTC price has also found resistance at a descending trendline that began back in July. The convergence of this trendline, horizontal resistance, and the top of the bear flag, together with topped-out short-term Stochastic RSIs, say that a reversal is about to take place.

At the bottom of the chart, one positive is that the RSI indicator has broken through a downtrend. Expect the indicator line to come back to retest the breakout.

Upside still the favourite outcome longer term

Source: TradingView

The weekly chart shows that the current green candle is wedged between the major ascending trendline below, and the shorter descending trendline above. With a potential corrective wave inbound, it may mean that a further candle gets wedged into this tightening gap. 

This battle between the two trendlines is likely to decide whether the price explodes to the upside, or whether it plummets to the downside. If the Fed cuts rates in December, which is looking likely, and there are no black swans in the economy, the upside move is still favourite.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.