Bitcoin (BTC) has been in a steady decline since the beginning of the year. The first wave of this decline, from January to February was a very steep one. However, when Bitcoin (BTC) broke the first downtrend and entered another phase of decline, the fall was not as steep. Similarly, this second downtrend was broken in August and now Bitcoin (BTC) is struggling to break past the third downtrend resistance. As we can see on the above chart for BTC/USD, this decline has become less steep with time as the correction comes to an end. This means that finding a bottom has not been a target but a process for Bitcoin (BTC). The less steep the decline gets, the more likely it becomes for Bitcoin (BTC) to begin a new trend.
An interesting observation on the above chart for BTC/USD is its relation to two important Fibonacci retracement levels. Historically, we have seen that Bitcoin (BTC) finds resistance at 61.8% and 38.2% retracement levels. I you draw a Fibonacci retracement all the way from the top of every lower high Bitcoin (BTC) has made during the correction, you will see how important the 61.8% and 38.2% fib levels have been as strong resistance. However, as the fall of Bitcoin (BTC) becomes less aggressive, the range of these Fibonacci retracement levels also narrows down. The major Fibonacci retracement drawn up from the high around $20,000 to the low near $5,800 shows a much clearer view of what is actually going on with Bitcoin (BTC).
The fact of the matter is that Bitcoin (BTC) completed its correction in June, 2018. After that, it was just a process of finding the bottom. If there was more to this, we would have seen lower highs and lower lows. However, that is not what happened. We saw lower highs but we have seen higher lows. This in itself is a strong indicator why the bears lost momentum and gave up on pulling the price further.
Bitcoin (BTC) could still see a rejection at the downtrend resistance. The price could fall back to $6,000 or even break lower to test the support at $5,800. However, that is all there is to it. If investors did not allow Bitcoin (BTC) to fall below $5,800 back in February when it was no different than catching a falling knife and to all the new investors in the game, Bitcoin (BTC) might have been a big pump and dump scheme. However, the strong hands did not let the price slip below those levels. Now, if they defended this level eight months back, it is unreasonable to think that the price could just fall below $5,800 and enter another bear trend after all it has been through since February, 2018.
While it may seem like Bitcoin (BTC) is headed back to the $6,000 level again, there are strong reasons to suggest that this time it may not happen. One strong reason is that Bitcoin (BTC) has been forming higher lows on the daily chart. However, short term, as the 1H chart for BTC/USD shows, there is an even more compelling reason to think Bitcoin (BTC) is going up from here and that is the bull flag being formed on the 1H chart. If Bitcoin (BTC) breaks out of this bull flag, there is a strong probability that it will run straight into the downtrend resistance and break it, to begin a new trend.