On Nov 3, Bitcoin (BTC) increased significantly to reach another high above $14,000. However, the higher prices could not be sustained and the price dropped back shortly afterward.

BTC is expected to eventually break down from the parallel channel it’s currently trading in.

Yesterday, the Bitcoin price increased significantly and created a bullish engulfing candlestick to reach a high of $14,083, only slightly below that of Oct 31.

The high was combined with a considerable bearish divergence in the RSI. The MACD is also decreasing, as is the Stochastic oscillator, which could make a bearish cross if the descent continues.

While there are more than 16 hours until the daily close, the price has already begun to create a bearish engulfing candlestick, and has dropped below yesterday’s open of $13,578.

In the chart below, regular divergences are shown with solid lines, while hidden divergences are denoted by dashed lines.

During the Oct 27-Oct 31 highs, the BTC price and RSI created a significant bearish divergence (solid black), but followed it up with a hidden bullish divergence the next day (dashed black), causing another price increase.

Yesterday, another bearish divergence was recorded (solid blue), and the price has been decreasing since. Until the daily candle closes, it is not clear whether another hidden bullish divergence will be recorded (dashed blue).

A close below $13,653 would invalidate the hidden bullish divergence and would suggest that the price will decrease as a result.

Since Oct 26, the Bitcoin price has been trading inside a parallel ascending channel, a movement that is likely to be corrective.

The previous two highs made on Oct 27-31,(red arrows) were made just under the resistance line of the channel. On the contrary, last night’s high failed to come close to the resistance line and created a lower high instead.

This is a sign of weakness, and when combined with the bearish divergence and the presence of the channel, suggests an eventual breakdown.

If a breakdown scenario continues to play out, the price could drop all the way to the support area between $12,700-$12,800.

The shorter-term chart also shows a pronounced bearish divergence present in both the RSI and the MACD.

This supports the possibility of a price decrease towards the aforementioned support area at $12,700-$12,800. While there is a minor support level near $13,000, the fact that it is so close to the support line of the channel makes it more likely that the price drops to the second support zone.

To conclude, the multiple bearish divergences and the fact that the price is trading inside a parallel channel make it likely that BTC is correcting.

A breakdown from the current parallel channel could take the price towards the support levels outlined above.

For BeInCrypto’s previous Bitcoin analysis, click here!

Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.

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