Technical Analysis on Bitcoin: Looking for a Bottom...Part 2

As suspected, bitcoin decisively broke through the $6,500 support. It’s currently in sub-wave 5, of primary wave 5, and looking for bottom (sub-waves in yellow). As I said yesterday, I’m targeting $5,805 (1.0 fib level).

Could wave 5 get cut short? Absolutely. There’s strong support between $6,000 and $5,800. We could easily see a bounce at that $6,000 support, or sooner. If we zoom into the 30 min chart, we can see a wedge has formed. This also suggests wave 5 is nearing completion. As it approaches the apex, a breakout becomes more likely.

Looking at the 4 hour RSI and MACD, we can see bullish divergence. This is another clue suggesting wave 5 is nearing completion.

Bitcoin is also trading at or below the lower Bollinger band on the 4 hour and 1 day chart. This also suggests we may soon see a bounce.

There is another possibility that’s much more bearish. Looking at sub-wave 3, we can see it extended to nearly the 2.618 fib level.

When wave 3 is extended that far, wave 5 is also often extended to at least the 1.618 fib level. That means wave 5 may extend to approximately $5,000. This is NOT my primary target, but it's a possibility we need to be ready for. Should Bitcoin decisively break below $5,800, I believe $5K will become likely.

Bitcoin broke below the 30.04 support on the 1 day RSI. It’s now about to test the 25.14 support. If this holds, it’d be a sign the bulls are still in the fight.

If bitcoin does drop further, I’m planning to latter in buys between $6,000 and $5,800, with a target of $6,500. I’ll keep a tight stop-loss at $5,700. I’ll get interested again if it drops to $4,650. Should that happen, I’ll latter in between $4,650 and $4,230 with a target of $5,700.

The 1 caveat to buying at the above levels is the 4 hour RSI must rise above the descending trend line.

I don’t mention the possibility of a further drop to scare anyone. As I previously stated, my primary count has Bitcoin going no lower than $5,800. That said, it’s important to remain vigilant and prepared for all possibilities. Should it drop to lower levels, be prepared and make sure you’ve got enough fiat on hand to take advantage of the low price. If you’re unsure or uncomfortable, it’s best to just sit on the sidelines and wait. There will be plenty of opportunity in the future.

Let’s see how the next 24 hour unfold.

BIAS:
Short Term: Neutral to Slightly Bearish
Longterm: Very Bullish

I hope this has been helpful. I’d be happy to answer any questions in the comment section below. Thanks for stopping by.

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FYI…I just started a Facebook and twitter page where I’ll post analysis, along with other relevant crypto data from myself and others. If you’d like to be notified as soon as updates reach Steemit, the twitter handle is @Workin2005 and the Facebook page is https://www.facebook.com/Workin2005/

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by Workin2005

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