From Monday the price action of Bitcoin has created a head and shoulders pattern with the expected downward move which has developed like expected yesterday.
The price has increased above the H&S pattern’s horizontal level but has shown signs of weakness as it found strong resistance before managing to exceed the prior high.
Now further downside would be expected as the correctional three-wave move to the upside ended which is set to be shortly confirmed by the price action movement.
- The price has encountered strong resistance at around $8200.
- We have likely seen a three-wave correction to the upside from last Friday
- The further downside would be expected to around $7100-7000 area.
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Bitcoin Analysis BTC/USD
From Monday the price has been decreasing and came down to $7676 as the price action created a head and shoulder pattern which is considered to be the “top” pattern.
As the price fell another upside move has been made after but with the price struggling to exceed the Monday’s high before showing signs of weakness as it encountered resistance below it at around $8020.
The price is currently being traded at $7936 and has been in an upward trajectory since yesterday but as it hadn’t exceeded the previous high on the yesterday’s upward momentum it is now likely headed down to some of the significant support levels out of which the currently most significant one would be the ascending trendline made from 11th of April.
Last Thursday the price reached the end of the 5th impulsive move of the lower degree count which is why we’ve seen a straight downfall after.
As this downfall was made in a five-wave manner the increase that followed is likely a correctional one if it ends as a three-wave move, and considering that the price has shown the signs of weakness it is likely to end as a three-wave increase.
This still hasn’t been confirmed as the price hasn’t fallen below the invalidation levels and hasn’t come up above the prior high which would mean that the move has been made in five waves.
This makes the outlook uncertain but the most likely outcome would be that we have seen the end of the higher degree 5th wave of the Minor count on last Thursday in which case the price action movement that followed would be viewed as correctional one.
The other possibility would be that price is now headed for further upside movement with the increase seen from Friday being the start of the next five-wave increase but considering the resistance shown and the impulsiveness behind the decrease seen last week I don’t believe that’s likely.
More likely we are seeing the higher degree move to the downside out of which the last weeks decrease is its starting wave with the increase seen after being a correctional second wave of a higher degree.
This would soon be verified as the price is to shortly interact with some of the significant levels but for now, I would be expecting further downside movements potentially back below $7000.
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