Bitcoin (BTC) has run into resistance and now appears to have topped out once again as it sets for a pullback. EMA alignment for BTC/USD on the daily chart above continues to remain bearish. The price action is showing signs of weakness as the bulls lose momentum at the strong downtrend resistance. RSI on the daily chart has also reached overbought levels. Furthermore, the RSI is trading in a rising wedge, a bearish indicator which means the price is likely to retrace strongly in the next few days. A rejection at this point would prepare Bitcoin (BTC) for its next wave of downward movement which is likely to break below $6,000.
Even Bitcoin (BTC) maximalists like Bitmex CEO, Athur Hayes believe that the price has to find a bottom before it can take off again. Most industry leaders, including Arthur Hayes, believe that the price can find a bottom between $3,000 and $6000. Based on the current price action, it is likely that Bitcoin (BTC) might fall below $6,000 again to finally find a bottom. The $5,800 support line (shown in blue) on the chart above has been tested only two times before. An important principle of technical analysis is that the more frequently the price of an asset tests a particular support line, the more likely it is to break it. Bitcoin (BTC) is likely to break market structure in this upcoming wave of downward movement which will most likely comprise of steep pullbacks fueled by significant FUD.
Bitcoin (BTC) has to complete a wave down and find a bottom. Without that, there is negligible chance of the price taking off. Recent rumors around a Bitcoin (BTC) ETF seem to have accelerated the completion of the upward wave. To complete this correction, Bitcoin (BTC) will now have to find a bottom. The expected timeframe for Bitcoin (BTC) finding a bottom, according to technical analysis is by September 2018 at the latest. This means that Bitcoin (BTC) can be expected to continue its downtrend in the weeks ahead.
Near term, the price of Bitcoin (BTC) looks ready to make a big move downwards. According to the 4H BTC/USD chart above, this move can be expected in the upcoming weekend. Bitcoin (BTC) is trading in a rising wedge on the 4H chart for BTC/USD and is close to the downtrend resistance at the same time. RSI conditions are overbought and DeMarket indicator hints a pullback in the near future. All of these indicators point to a strong pullback in the days ahead, one that would mark the beginning of the downward wave to $5,800 levels or even lower.
EMA alignment on the 4H chart for BTC/USD has been since 18th July when the price was trading around $6,300. This gave hope to most investors resulting in a price rise all the way to $8,300. A thorough analysis of EMA alignment at this point suggests that if the price retraces and continues downwards again, it is likely to breach $5,800 and find a bottom at lower levels, which will finally put an end to Bitcoin (BTC)’s correction.