The Bitcoin (BTC) price has increased massively in 2023 but is showing signs that the upward movement is running out of steam. A short-term correction could occur throughout the next few weeks.
The Bitcoin price has increased since Nov. 21, when it was trading at an annual low of $15,476. Shortly afterward, it created a higher low. It then broke out from a descending resistance line on Jan. 13. At the time of the breakout, the line had been in place for almost six months. Breakouts from such long-term structures often lead to considerable upward movements.
So far, the BTC price has reached a high of $23,954. However, signs of weakness are beginning to appear. These are visible in both the daily RSI and candlestick patterns.
Firstly, the daily RSI has generated bearish divergence. The fact that the divergence appears in overbought territory increases its significance. If the RSI were to fall below 70, it would confirm that a drop will follow.
Additionally, depending on the daily close, a bearish engulfing candlestick could be created. A close below $23,030 will confirm this.
Due to these readings, a decrease toward the $21,000 support area is the most likely scenario. On the other hand, a daily close above $24,500 would invalidate this bearish outlook and suggest that the digital asset’s price will increase toward $30,000 instead.
Bitcoin Price Wave Count Predicts Correction
A closer look at the wave count supports the possibility of a decrease. It shows that the Bitcoin price is either at the end of wave three or has already begun wave four of a five-wave upward movement. Wave three extended considerably but has lost steam over the past 24 hours.
Since wave four is usually shallow, the most likely outlook suggests that it will only correct to the 0.382 Fib retracement support level near $21,000, aligning with the previously outlined $21,000 horizontal support area.
Afterward, the upward movement could continue to $26,080 or even $27,830. The targets are found by the 3.61 and 4.21 extensions of wave one. However, a more accurate target can be estimated once wave four is complete.
On the other hand, a decrease below the wave one high of $18,040 (red line) will invalidate this count since it would mean that wave four dropped into wave one territory. In this case, lows near $15,000 are expected.
To conclude, the most likely Bitcoin price forecast is a short-term drop toward $21,040 followed by an upward movement toward $26,000 and possibly $27,830. A decrease below $18,400 would invalidate this bullish outlook. In that case, the Bitcoin price would be expected to reach lows near $15,000.
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