Bitcoin (BTC) failed to break out of the confluence of resistance levels and formed a bearish candle that took it to $30,000.
BTC has been falling below a descending resistance line since April 5. The most recent rejection occurred on May 5, leading to a May 12 low of $26,700.
The price has been trending upwards since then but has failed to form a bullish structure. Instead, it is trading inside an ascending parallel channel, which usually has corrective formations.
Yesterday BTC was rejected by the middle of the channel, the $31,500 resistance area and the descending resistance line above (red sign). In turn, this formed a bearish candle.
The price is now trading again at the support line of the channel.
Daily RSI readings provide a mixed outlook.
On the one hand, the RSI has generated a bullish divergence (green line). On the other hand, the RSI has been rejected twice (red sign) by the 50 line and has generated some hidden bearish divergence.
If the Bullish Divergence trendline breaks out, it is likely to bring down the price.
The two-hour chart is showing that the price is declining inside a descending parallel channel. Currently, it is attempting to stay above the middle of this channel (red sign).
A breakdown below this would confirm the daily time frame readings and indicate that lower prices are in store.
BTC wave count analysis
There are two possible wave counts that can occur.
The first is bearish, and it suggests that the price is in wave four of a five-wave downward movement (white).
If true, this means that the price will soon drop below $25,000 to complete wave five.
The second is faster, as it indicates that wave five has been completed by truncating.
In this case, the price has bottomed out and will soon rise to $35,000.
Whether there is another breakout or rejection from $31,500 will determine which count will transpire.
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