Bitcoin (BTC) has broken out of a three-month descending resistance line. It appears to be trying to validate the level as support, validating the breakout in the process.
Bitcoin has been trading below a descending resistance line since early April. The downside led to a long-term low of $17,622 on June 18.
The price has mostly traded sideways since then, but finally managed to break out of the line on July 18th. The breakout also coincided with a rebound of the $20,700 horizontal resistance area. Currently BTC is trying to validate these two levels as support.
The daily RSI is above 50 and rising above an ascending support line (green line). If the uptrend continues, the closest area of resistance would likely be $29,370.
Short term movement
In contrast to the daily chart, the six-hour chart offers a mixed outlook.
BTC trades within an ascending parallel channel. Such channels usually contain corrective moves, meaning that an eventual collapse of them would be likely. The price was rejected by the channel’s resistance line (red symbol) on July 19 and the RSI has generated bearish divergence (green line).
On a positive note, BTC is still trading above the midline of the channel and the $21,700 horizontal support area outlined earlier.
Until the price either breaks out of the channel or falls below its midline, the direction of the short-term trend remains unclear.
BTC wave count analysis
The most likely wave count suggests that Bitcoin has already completed a five-wave (yellow) downward move when measured from early April. At that potential count, wave five was cut off and ended above the bottom of wave three.
This count would also complete a longer-term fifth wave.
The alternate count comes from the ambiguity on the 6-hour chart, which is showing some bearish signs. In it, BTC has just completed the fourth wave and may fall again to complete the fifth wave. The problem with this count is the fact that wave four is ten times longer than wave two, which is extremely unusual for such structures.
To be[in]Crypto’s previous Bitcoin (BTC) analysis can be found here.
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