Bitcoin (BTC) managed to reach a local peak at $24,245, before dropping to validate an important area of horizontal support. If it manages to hold it, the coming days could initiate an upward move toward $28,400.
Bitcoin has been in a downtrend since reaching an all-time high (ATH) at $69,000 in Nov. Since then it hit a low of $17,592 on June 18. Thus, the ongoing bear market has led to a 75% drop in the price of BTC from the ATH.
However, Bitcoin initiated a rebound from the aforementioned low and a drop below the 200-week moving average (MA 200).
At the end of July, it managed to regain the weekly 200 moving average, which is currently at $22,950. Interestingly, this area remains in confluence with several other important support levels, which should soon allow BTC to rebound:
- horizontal resistance/support at $22,950 (red line)
- the median of the rising parallel channel
- 200-day moving average (purple line)
Technical indicators
In the chart above, we see the signature of BTC trading volume, which has been steadily declining since the June lows.
The trend line of this decline (blue) suggests that the compression period is coming to an end. At the end of this week or at the beginning of next week, we should expect a volume breakout, which will probably lead to a strong upward or downward movement.
An identical reading is provided by the Bollinger Band Width Percentile (BBWP) indicator, which measures the volatility of an asset. Over the past three days it has reached extreme lows of less than 1% (blue bars). This suggests that the Bitcoin market is preparing for another move.
The daily RSI, on the other hand, is giving moderately bullish readings. First, since the June lows it has followed the rising support line (orange), which has been tested several times. Then, since the end of July, it has been above the 50 level, which suggests bullish momentum.
Thus, if the RSI bounces again from rising support (blue arrow) and stays above 50, it will be a strong sign of a bullish trend.
However, a loss of support and a drop below 50 could initiate a continuation of the bearish trend. Then the support areas from the first section would likely be lost.
Bitcoin bullish target: $28,400
If the bullish momentum continues, Bitcoin could soon reach a target in the range of $27,500 to $28,600. This is the range of the so-called CME gap generated by a rapid decline between June 11-12.
Moreover, the 21-week exponential moving average (21 EMA) is currently located at $28,400. This area has historically served as bull market support or bear market resistance. Therefore, its re-validation seems likely and gives a target for BTC’s next move.
Moreover, the same target is obtained on the basis of the ascending triangle that began to generate after the June 18 low. This triangle is considered a pattern of bullish trend continuation or reversal after a downtrend. The technical target here is $28,350, which only adds confluence to our analysis.
For Be[in]Crypto’s previous Bitcoin (BTC) analysis, click here.
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