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Bitcoin (BTC) Price Creates Large Bearish Candle After Rejection, What Next?

The price of Bitcoin (BTC) fwas rejected by long-term resistance and created a large bearish candle. It is likely to continue adjusting in the near future.

Weekly Outlook

The Bitcoin (BTC) price broke above an rising wedge during the week of November 6 to 12, 2023. As this is considered a bearish pattern, a breakout above it often traps bears and is typically followed by a strong upward movement.

Indeed, the BTC price surged by 41.06% and tested a crucial horizontal resistance at $48,000 before being rejected last week.

The rejection (red arrow) formed a large bearish candle with a long upper wick, signaling selling pressure.

The weekly RSI dropped below the 70 level and is sloping downward, indicating a weakening control by the bulls.

Therefore, BTC may have initiated a correction within the uptrend. The potential target for this correction is the significant support level at $37,000, formed by the wedge’s resistance line and the 0.5 Fibonacci retracement level.

BTC/USDT weekly chart . Source: TradingView

Ascending Parallel Channel

The daily chart reveals that the BTC price has been trading within an ascending parallel channel since December 11, 2023. On January 8, 2024, BTC broke above the channel, marking the continuation of the previous uptrend.

However, it turned out to be a false breakout (red ellipse) as BTC retraced back inside the channel on January 12. Such deviations often trap bulls and are usually followed by a sharp decline.

The daily RSI has crossed below 50 and is sloping down, indicating the bears have regained control.

Therefore, there is a possibility that BTC will break below the channel and decline towards the mentioned target above.

BTC/USDT daily chart . Source: TradingView

Conclusion

The most likely scenario suggests that the BTC price will undergo further correction in the near future. The potential target for this correction is $37,000.

Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.

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