Bitcoin (BTC) has rebounded from a confluence of minor support areas and is showing signs of a potential short-term trend reversal.
Bitcoin has been trading above an ascending support line since January 24. The line has been validated four times (green icons), most recently on March 7. Additionally, the price fell below twice before creating a long lower wick and reclaiming Support.
Support lines get weaker each time they are touched. Therefore, it seems possible that BTC could soon break down from this line.
On top of that, the technical indicators are bearish, as the RSI and MACD are falling. Additionally, the MACD is negative and the RSI is below 50, both considered signs of a downtrend.
Short-term support
Despite the relative bearishness from the daily chart, lower time frames are considerably more bullish.
The six-hour chart shows that BTC has bounced twice from the 0.618 Fib retracement support level near $37,800.
In addition to this, the two-hour chart suggests an imminent rebound.
The reason for this is the pronounced bullish divergences that have developed in both the RSI and the MACD (green lines). Such divergences often precede bullish trend reversals.
If a reversal occurs, the closest resistance area would be found at $41,250. This is the 0.5 Fib retracement resistance level and a horizontal resistance area.
BTC Wavenumber Analysis
The long-term wave count remains unclear. However, the short-term count suggests that BTC is primed to bounce back to the $41,000 level
The reason for this is that BTC appears to have completed a five-wave downward move from March 3.
What follows is normally a corrective structure, which could take BTC to the proposed $41,250 resistance area.
Once the trend is over, the downtrend could probably resume.
