Bitcoin (BTC/USD) made a bullish breakout last week which reached the expected target at $57.5k.
However, the bearish retracement has been much more impulsive than previous pullbacks in the current uptrend.
Let’s review the status of the uptrend in combination with the chart plus wave patterns.
The BTC/USD bearish retracement seems to be similar to the ETH/USD pullback in yesterday’s analysis: a wave 4 pattern (grey).
Just like Ethereum, Bitcoin has made a bullish bounce at the 38.2% Fibonacci retracement support level (blue box). Although the bearish decline was fierce, the bulls were able to stop and reverse it.
The strong decline is typical for a wave A of a larger ABCDE triangle pattern (orange). Which is why a triangle has the best probability at the moment. Let’s review the daily chart above:
On the 1 hour chart, the bearish price action yesterday was an ABC (green) correction in the wave A (orange).
The resistance trend line (orange) will not be an easy level to break. But if price action does break it, then a bullish wave C (green) is expected.
The main target for the immediate breakout is the previous top. Here a bearish bounce is likely (red arrow), which could create a wave C (orange) downwards (orange arrows).
Only an immediate bearish breakout below the support lines (green) could indicate more downside pressure (dotted orange arrows) sooner than expected. In that case, price action could reach the next support zone at $40k-$44k.