Bitcoin (BTC) rose considerably on Feb 24, reaching a high of $39,843 before being rejected. Reclaiming the $39,850 area is crucial for the continuation of the upward move.
Bitcoin initially dropped on Feb 24, reaching a low of $34,332. However, it recovered immediately afterwards and created a very long bottom fuse with a magnitude of 8.60%. Furthermore, the bounce served to validate the $34,400 horizontal area as support.
The bullish candlestick with a long lower wick is very similar to the one on January 24 (green icons), after which BTC started a significant upward move. As a result, it is possible that a similar pattern will emerge this time around.
Divergence precedes leap
The six-hour chart shows that the bounce was preceded by considerable bullish divergences (green line) on both the RSI and MACD.
Such divergences often precede upward moves, as was the case with yesterday's BTC move. This occurrence strengthens the validity of a possible trend reversal.
The two-hour chart shows that BTC is facing strong resistance at $39,550. This is the 0.5 Fib retracement resistance level, a horizontal resistance area and also a range that coincides with the support line of a previous descending parallel channel.
The area rejected the price on Feb 24, creating a long upper wick.
Therefore, recovering it is crucial for the trend to be considered bullish.
BTC wave count analysis
The wave count shows that BTC has completed a short-term five-wave downward move that ended with yesterday's low. In many cases, what follows is a bottom-up corrective structure.
As it stands, the most likely scenario suggests that the price is in the process of completing wave A of an ABC corrective structure.
After that, another brief downward movement can happen.
For BeInCrypto's previous Bitcoin (BTC) review, click here
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