Bitcoin (BTC) fell sharply this week to reach a low of $26,700 on May 12. This is the lowest price that it’s seen since December 2020.
Bitcoin had been trading inside a long-term ascending parallel channel since May 2021. In January 2022 BTC rebounded from the support line of the channel and reached a local high of $48,189 on March 28.
The price has been falling since then, however, and it broke down from the support line of the channel during the week of May 9-16.
Technical indicators are bearish. This is evident by the decreasing RSI, which is now considerably below 50 (red icon). Additionally, the weekly volume has been massive during the drop, despite there being several days left until the close.
Daily breakdown
The daily chart shows that BTC has been falling at an accelerated rate since breaking down from a shorter-term channel on May 5 (red icon).
On May 10, BTC rebounded off the $30,500 horizontal support area, which had been in place since May 2021. However, the bounce was short-lived and the price broke down on May 11 and has now reached a long-term low of $26,700.
Despite the daily RSI being extremely oversold, it has not generated any bullish divergence yet.
The two-hour chart shows that the price has been stuck beneath a steep descending resistance line since May 5.
Unlike the daily chart, the RSI is more bullish, since it has broken out above its trendline and has generated a bullish divergence. Nevertheless, this is not nearly enough to counteract the bearish readings from the weekly and daily charts.
BTC wave count analysis
The most likely wave count suggests BTC is in the C wave of an A-B-C corrective structure (red), which has been in place since the November 2021 all-time high.
Giving waves A and C a 1:0.61 ratio would lead to a low of $25,950. If a bottom is not reached there, a 1:1 ratio could find a low being reached near $12,100.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here
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