Bitcoin (BTC) gathers its strength. Will it reach the $30,000 mark again?
Date: 2023-07-31 Author: Karina Ziganova Categories: BLOCKCHAIN
On July 21, Bitcoin (BTC) broke through the horizontal resistance area, which was the culmination of a decline that began eight days earlier
The readings on the daily timeframe are bearish, however, a shorter-term wave analysis suggests that the price of BTC will soon reach the bottom, and may have already reached it.
Bitcoin rolled back from resistance
As the results of the technical analysis of the daily chart show, the picture for BTC is painted in bearish tones. On July 13, bitcoin hit a new yearly high of $31,800, but then declined rapidly.
The next day, a bearish engulfing candlestick pattern formed on the chart. This pattern is characterized by a large bearish candle (red circle) that completely absorbs the previous day's bullish candle. Such patterns often signal a possible decline.
After the appearance of the bearish candlestick pattern, the BTC rate stayed above the horizontal level of $30,000 for some time. However, in the end, on July 23, he made a decisive bearish breakthrough. This breakout turned the entire previous bullish breakout into a price deviation, which is often followed by a sharp decline.
The daily Relative Strength Index (RSI) gives clear bearish signals. This momentum indicator is currently in a downtrend and is holding below the 50 level which is a sign of a bearish trend.
In addition, when the price decreased, the RSI confirmed the triple bearish divergence that had been forming since June 23 (green line). Bearish divergence occurs when price rises but the momentum indicator decreases. This indicates that the strength of the upward movement is fading. Such a pattern is often a harbinger of a bearish trend reversal.
BTC Forecast: Wave Analysis Promises a Quick Bottom
Meanwhile, a wave analysis of the shorter 6-hour timeframe indicates that bitcoin is correcting, but this correction is already nearing completion.
Presumably, BTC has been forming a five-wave bullish structure since June 14. If this wave analysis is correct, it means that the price has started a correction further, probably following the W-X-Y pattern.
On July 24, the price rebounded from the Fibonacci level of 0.382 retracement (green icon). Fibonacci levels are traditionally considered the most likely springboards for price stops and reversals after significant progress in any one direction. Thus, they can determine the limit levels of the price movement.
Moreover, the rebound coincided with the channel's support line. This further increases the likelihood that the movement inside the channel was corrective. However, a bullish breakout from the channel is needed to confirm the completion of the correction.
Despite this optimistic outlook, BTC's drawdown below the July 24 low at $28,842 would mean that the correction is not yet complete. In this case, a new decline to the channel support line is likely.
Currently, this support line is at $28,000. A decisive close below the 0.618 Fibonacci retracement at $27,300 will indicate that the price has reached a local top. In such a scenario, the price of BTC could drop to $25,000.
