Bitcoin (BTC/USD) failed to break the 21 ema resistance zone. Now price action is testing a key support decision zone again. 

Image Source: Upsplash

Will the support trend line (green) and deep Fibonacci levels stop the decline? Let’s review the Elliott Wave and Fibonacci patterns.

Price Charts and Technical Analysis

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Bitcoin has extended its sideways range between $30 and $40,000 for another week. The correction is taking a long time to develop but that is common in wave 4s (pink):

• The correction is probably part of a wave B (orange).
• A break below the 100% Fibonacci level and bottom invalidates (red circle) the bullish Elliott Wave outlook.
• A bullish break (green arrow) above the 21 ema zone, 144 ema, and resistance trend line (orange) confirms the bullish rebound.
• A bullish ABC pattern could complete a wave C (orange) of wave B (grey) at the previous top.
• Ultimately, a larger ABC (grey) pattern could complete the wave 4 (pink) and a new uptrend could emerge for a wave 5 (pink).

On the 4 hour chart, price action seems to be creating a contracting triangle chart pattern:

• A bearish ABCDE (blue) triangle pattern seems to be the most likely scenario.
• Why? The triangle pattern fits well with the expected market psychology where price is now expected to go sideways and not break for a while.
• The ABCDE (blue) could complete a wave B (green) pattern of a larger ABC (green).
• The alternative Elliott Wave scenario is a wave B2 (green) followed by a bullish ABC (black).

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