Bitcoin (BTC) has been in a constant downtrend for the last few weeks. The price crashed especially hard during the last few days. The price did break below $6,000, but contrary to expectations, the price found support at what was previously a downtrend resistance as can be seen on the BTC/USD daily chart above. The fall slowed down after Bitcoin (BTC) breached $6,000 but Bitcoin (BTC) was still expected to test the $5,800 support, which it didn’t. The reason for that is that Bitcoin (BTC) found another support before the historical $5,800 support which also served as a support before the last bull run.
Technical indicators on the above chart for BTC/USD show that the days of long swings are gone for now. The Elliot Wave Oscillator on the above chart shows that the intensity of every wave up and down has increased significantly and the wild swings have now been reduced to small alternating movements in a tight range. This is another reason to believe that Bitcoin (BTC)’s correction is finally close to its end and that the price is now in its final few weeks of downtrend. Even if the downtrend continues till October, which is very unlikely, the price still cannot be expected to go down significantly as the momentum for sell side action is almost gone. RSI for the above BTC/USD chart suggests that the price will rise for the next few days till it runs into the short term downtrend resistance (shown by the white line).
The price currently faces resistance at the $6,500 level short term and $7,700 level medium term according to the BTC/USD 4h chart above. It is pertinent to note that the EWO diagram for this wave down suggests that the near term downtrend will come to completion within the next few hours as the previous upward wave took 15 days and 8 hours. Since the price action is symmetrical, it is reasonable to assume the downward movement will take the same time.
If Bitcoin (BTC) has not already found a bottom, then it is likely that there could be one final wave down but the chances of that happening at this stage are insignificant as most altcoins are back at where they were before the last bull run, having lost more than 90% of their gains. This last wave of capitulation seems to have affected altcoins more than Bitcoin (BTC) as the latter has held its ground as the market bled.
The 1H chart above for BTC/USD shows that the price has currently run into the 200 EMA resistance and is not likely to break above it in the near future. The RSI has been trading in a rising wedge for the last two days and has now reached overbought levels. This means that the price is likely to retrace in the next few hours before it can test the 200 EMA again.
EWI indicator on the above chart also shows that this wave has peaked out and that the price will now have to fall short term before it can rise again. Short term, further downside might be likely but looking at the bigger picture, this correction seems to have come to an end. Bitcoin (BTC) shorts are also close to their ATH on exchanges like Bitfinex. The market sentiment is more negative than it has ever been in the last two years and most analysts seem convinced that the price could fall further. No positive developments seem to move the market. All these developments suggest that the price has indeed reached rock bottom or is very close to reaching it, and that Bitcoin (BTC)’s best days are ahead of us.