Bitcoin (BTC) is close to breaking the correction pattern seen since June 18. If that happens, it is expected to lead to new lows.
Bitcoin has been breaking through downside resistance since late March. The line was rejected on June 7, resulting in a local low of $17,622 on June 18.
Prices have since edged up and made two higher lows. However, it failed even to reach the downtrend resistance line and was rejected by the $21,700 horizontal resistance zone.
The daily RSI has yet to exceed 50 and is rejected at the same time price is rejected at the $21,700 level. RSI, on the other hand, remains above its uptrend line (green). A breakdown of the line may confirm that prices are heading lower.
Short-term subdivision
A closer look at the six-hour chart shows that the outlook is mostly bearish.
First, prices have been trading in a parallel channel rising since June 18. These channels often contain correction structures, which means that a break will eventually occur.
Secondly, the 6-hour RSI has broken from the uptrend line below 50.
BTC wave number
Wave numbers indicate that BTC has been in a five-wave downtrend (yellow) since the end of March. The existence of this structure makes IT possible that BTC is currently in the fourth wave.
If it crashes, the likely target for the bottom would be $16,725. This target was found using a length of 0.382 waves 1-3.
Long-term wave numbers suggest that BTC is in the C-wave of the ABC correction structure (red), which has been developing since reaching an all-time high of $69,000 in November 2021.
Given the failure of the $16,726 level, A 1:1 ratio of wave A and wave C would result in A long-term low of $12,100.