Bottom line: Bitcoin bullish structure remains intact until prices stay above 6425 levels. Bulls might be preparing to stage a rally towards 14200 levels from here.
Technical Analysis:
Bitcoin might have completed its corrective drop as expected close to 7900/8000 levels. It seems to have completed a potential zigzag corrective wave structure since 10500 highs print on February 13, 2020. Looking at the wave structure since 6425 lows in December 2019, Bitcoin seems to have now completed lower degree Waves 1 and 2 at 10500 and 7636 levels respectively. Please note that the rally between 6425 and 10500 was clearly sub divided into 5 waves, labelled as Wave 1; while the subsequent drop has been corrective (3 waves), between 10500 and 7636, labelled as Wave 2. If the above structure and counts are correct, bulls might be preparing for a Wave 3 rally towards 14200 levels at least. Please note that 14200 is Fibonacci 1.618 extension of Wave 1, a typical correlation for Wave 3 to terminate. Also note if Wave 3 is an extension, prices are expected rally much above the 14200 mark, going forward. Traders might be willing to initiate fresh long positions around current price action (7840), with a protective stop at 6425 and projected target beyond the 14000 mark at least, as Wave 3 termination. Please note that immediate resistance is seen at 9000 levels and break above that would confirm that a higher low is already in place at 7636 levels. The overall wave structure indicates that Bitcoin is already progressing with a higher degree Wave ((5)), since Wave ((4)) termination around 3000 levels in December 2018. Furthermore, Wave (1) terminated at 13800, followed by Wave (2) around 6425 levels respectively. Since then Wave (3) is underway and is expected to terminate above 15000 mark easily. Watch out for a bullish reversal ahead.
Prepared by
Harsh Japee, Technical Analyst.
Bitcoin Chart
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