Over the last 3 Days, Bitcoin has dropped around $1,000 forming a tight descending channel. Bears are struggling to gain any momentum as price levels toy with key support around $9,850 as mentioned in my previous analysis.
Bitcoin Hourly Chart
On the 1 hour chart, we can see the newly formed descending channel as a result of the recent move from $11,000 down to around $9,900 just above key support at $9,850. POC (Point of Control) still sits back at $10,600 on the hourly, indicating no real bearish momentum has built up in this recent pull-back.
MACD has also been fairly lifeless during this downturn with no wild jumps or drops when compared to MACD’s activity throughout mid-July. Typically, such a narrow descending channel is very bullish, similar to the falling wedge. This is now the 2nd descending channel that has formed on my chart above, which compared with the current bullish trend on BTC, paints a bullish picture for the days and weeks to come.
Despite the bullish sentiment, if Bitcoin price levels break key support between $9,800 and $9,400 it’s likely to price levels will continue to drop too low $8,000’s. I will also be keeping a close eye on how altcoins act to gauge sensible trades and entries, as stated in more detail within my previous analysis.
On the 2 hour chart, we can see both of the descending channels more clearly. If RSI proceeds upwards from its current level this will be a higher high accompanied by lower lows for BTC’s volume displaying potential bullish divergence.
Key resistance levels to look out for if Bitcoin price levels break upwards accompanied by a large volume spike are $10,450, $11,400 (POC), $12,400 and $13,400. It’s likely that a breakout accompanied by a large volume spike will cause price levels to exceed the current yearly high just shy of $14,000.
If price levels proceed to break key support at $9,800 I will be looking at the following support levels: $8,400, $7,900, $7,400. However, the sentiment for BTC on all time frames is very much bullish and will remain that way until key support has been clearly broken. The ideal entry point over the coming days is the breakthrough of the descending channel. This will present a low-risk high reward trade opportunity because you know if price levels drop a further 5% after breaking out that the trade objective of running with the market is no longer feasible.
Do you think BTC will breakout and head back towards the yearly high around $14,000 before Summer ends? Please leave your thoughts in the comments below!
Images via Bitcoin chart by Tradingview, Shutterstock