Bitcoin (BTC) price broke above a long-term descending resistance line, confirming two bullish RSI readings in the process.
Since hitting an all-time high of $69,000 in November 2021, bitcoin price has fallen below a descending resistance line. BTC broke out of line in October 2021 and validated it as support (green icon) the following month. Since then the price of BTC has increased. It formed a huge bullish candlestick last week. If the rise continues, the nearest horizontal resistance lies at $24,300, while the nearest Fib resistance lies at $35,780.
However, the price action is not the most interesting thing with bitcoin right now. That title goes to RSI.
The indicator had fallen below a descending resistance line since the beginning of 2021. The divergence from this line initiated the overall downtrend of the current bear market. Since the July 2022 low, the indicator started generating bullish divergence (green line).
Last week, the RSI broke out of the bearish trend line after 721 days due to a bullish candlestick. Never before has the RSI had a trend line for such a long period of time. Furthermore, the breakout confirmed the bullish divergence in the indicator.
As a result, technical analysis is decisively bullish on the weekly time frame. A weekly close below $17,000 would be needed to turn it bearish.
Bitcoin Price Prediction for 2023: Relief Rally or New Bull Run?
Three possible bitcoin wave counts are in play. All three indicate that an upward movement is expected in the short term.
The most likely count is that the bitcoin price completed a five-wave decline, which is the first part of a long-term correction.
Therefore, the price has started an upward ABC move (black), which could end near the 0.5 Fibonacci retracement level at the average price of $42,150. After this, another decline is expected.
This is the most likely calculation because neither wave is in proportion to one another, and wave four has taken the shape of a triangle (white).
A drop below the $15,558 low will invalidate this calculation, predicting a bearish trend ahead.
The second count indicates that the correction is complete. In this, bitcoin price completed a complex, WXYXZ formation and has now started a fresh upward movement that will eventually take it to a new all-time high. In this possibility, the price of bitcoin has already reached its bottom.
The only problem with this calculation is that wave Z is very small compared to W and Y, but this problem is not present in a logarithmic chart. The invalidation level for this count is also at $15,558.
The last count shows that the bitcoin price is still in the fourth wave. The most likely target for the top of wave four is just above the August 2022 high of $25,000.
The problem with this calculation is the extreme length of wave four compared to wave two. Wave four is three times longer than wave two (white), which is unusual.
This is the only calculation that does not provide a bullish bitcoin price prediction for 2023.
Conclusion: Bias is tilting towards bullish
To conclude, bitcoin price action is bullish due to the weekly RSI reading, especially the bullish divergence and breakout of a bearish trend line. While there are still three counts running, they all suggest that the upward momentum will continue, at least in the short term. A drop below $15,558 would invalidate this bullish BTC price analysis.
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