Bitcoin is showing a short-term bullish signal while the long-term outlook remains bullish.
Important level
Bitcoin broke out of a descending wedge pattern in November with a large bullish candle. This move also helped BTC break the long-term downtrend structure by breaking the $21.5k resistance level and touching the next resistance level at $25k.
After the correction, Bitcoin successfully flipped the $21.5k level into support and created a bullish engulfing pattern during the week of February 13-20. However, this momentum was not enough to break through the $25k level, causing the price to drop back to the $21.5k level once again.
Although the price has dropped in the past two weeks, it has not erased the previous bullish candlestick’s price increase. Therefore, the trend is still upward.
The RSI indicator is above 50, supporting the possibility of a rebound from this support level. If so, the price may retest the $25k level.
Short-term recovery
After a strong increase since the beginning of the year, Bitcoin seems to be trading inside an ascending parallel channel. Recently, the price has broken below the channel’s midline and approached the channel’s support line.
This line has helped the price rebound twice before, so it is likely to do so again. Price action and RSI indicator support this prospect as it creates a false break below the channel’s support line (blue arrow) and significant bullish divergence.
Therefore, Bitcoin may recover in the coming days, with the first target being the channel’s midline at $23.8k.
This bullish view will be invalidated if the price breaks down below the channel. If so, BTC could drop to $21.5k and lower to $20.5k.
Conclusion
Bitcoin is showing signs of short-term recovery with the first target at $23.8k.
The long-term prospects are still bullish as the $21.5k area is held.
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