Bitcoin has been rejected by the $25,000 area and may continue to fall towards $22,000.
In January, the personal consumption expenditures (PCE) price index excluding food and energy rose 0.6%, with an annual rate of 4.7%, much higher than market expectations of 0.5% and 4.4%. This has raised concerns that the Federal Reserve may continue to raise interest rates and increase selling pressure in the crypto market.
ascending parallel channel
Bitcoin appears to be trading within an ascending parallel channel after a strong rally since the start of the year. Recently, the price was rejected by the resistance line of the channel and started the current downtrend.
On February 24, the price decisively fell below the middle line of the channel. Therefore, it may continue to decline towards the $22,000 channel support before recovering again.
The daily RSI supports this possibility as a bearish divergence has formed and the divergence line remains intact.
BTC/USDT daily chart | Source: TradingView
The 4-hour chart favors a bearish outlook from the daily time frame. Bitcoin has now broken below the key support area formed by the horizontal support and the 0.382-0.5 Fib support at $23.5k. This is a sign that the bears are taking control in the short term.
While the price is currently trading within the 0.5-0.618 Fibonacci support zone, it is not a critical area for this move as it does not coincide with any support. Therefore, it is likely to be broken after a small consolidation.
If so, BTC could drop to the next horizontal support area at $22,000 and then to $21,500.
The chances of a bounce from the $22,000 area are higher as it coincides with the support line of the channel, as mentioned above.
BTC/USDT 4-hour chart | Source: TradingView
Overall, the most likely scenario suggests that Bitcoin will continue to fall towards the $22,000 region after a small consolidation in the 0.5-0.618 Fibonacci support area.
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