On July 27, the Bitcoin (BTC) price reached a high of $11,394 after a massive rally. However, the upward move has stalled and the price has been gradually decreasing since.
On July 27, the Bitcoin price created a bullish engulfing candlestick, causing the price to reach a high of $11,394, breaking out from the previous long-term resistance area.
Bitcoin Still Cautiously Bullish
Yesterday, BTC followed up with a small candlestick with wicks on either side and a bearish close. This is a sign that the upward trend is facing indecision, noted by the failure for the price to resume moving upwards.
Technical indicators show that while the trend is clearly overextended, it has not shown any weakness yet:
- The price is trading significantly above its 50-day moving average (MA), due to the extent and speed of the preceding increase.
- The RSI is considerably overbought but has not generated any bearish divergence yet.
- The MACD momentum is still growing.
Therefore, the daily trend remains cautiously bullish.
The slightly shorter-term six-hour chart gives very conflicting signs.
The Bitcoin price has been decreasing since reaching a high of $11,394 on July 27. The price movement since has left long wicks in both directions. Yesterday, the price created a bullish inverted hammer and followed that up with a bearish hammer in the next six-hour candle, effectively canceling each other out.
Technical indicators are showing weakness, but not enough to predict a reversal. The MACD has lost steam, but a bearish cross has not occurred yet. The RSI is in the process of generating some bearish divergence, though it has not been confirmed yet.
Direction of the Next Move
Since reaching the aforementioned high, BTC has been trading inside a symmetrical triangle. Due to the long upper-wick in the original high, we cannot be certain about the slope of the descending resistance line, so it is possible that the price has already broken out from this pattern. The same holds true for the slope of the support line.
The creation of a higher-high above $11,200 would go a long way in indicating that the price has broken out and will likely use the momentum to continue climbing upwards.
The long-term chart shows that the price is very near an important long-term resistance area, found at $11,700. This resistance area has not been broken or reached since July 2019.
On the other hand, the $10,300 support area that the price has broken out from has not been re-tested yet. It would make more sense for the price to drop back to this area before eventually breaking out above $11,700.
However, since this is a weekly chart, it would be possible for the price to increase towards resistance in the short-term, before eventually falling to support.
To conclude, while the upward move for BTC has been overextended, there are no clear cut signs of weakness that would suggest the price will retrace in the near future.
For our previous analysis, click here.
Source: Be In Crypto