Bitcoin (BTC) has reclaimed a short-term support level after deviating below it. Reclaiming this support is crucial for the continuation of the upward movement.
Bitcoin had been trading below a descending resistance line since April 5. The line caused several rejections, most recently on June 7. Following this, Bitcoin decreased to a long-term low of $17,622 on June 18.
BTC has been overall moving up since then. It broke out above the line on July 18. However, it has yet to initiate a significant upward move. On the contrary, it seems to be decreasing in order to validate the line as support.
The movement of the daily RSI is quite noteworthy. The indicator has returned to its bullish divergence trendline and is in the process of bouncing for the third time (green icon). In order for the upward move to continue, it’s crucial that the indicator does not break down below this line.
If the upward move continues, the closest resistance area would likely be found near $29,370. This target is the 0.382 Fib retracement resistance level.
Conversely, if the RSI breaks down from this line, new local lows could be on the horizon.
Potential support levels
The six-hour chart shows that BTC had been increasing above an ascending support line since June 19. Currently, the support line is located at $20,200, aligning with the 0.618 Fib retracement support level.
Currently, Bitcoin is trading inside a strong support area at $21,000, created by the 0.5 Fib retracement level and a horizontal support area. It previously deviated below it on July 26 before reclaiming it the next day. Its validation as support would be a strong sign that the short-term correction is complete.
BTC wave count analysis
The most likely short-term wave count suggests that Bitcoin is in wave two (yellow) of a five-wave upward trend. Inside it, the sub-wave count (black) shows a complex W-X-Y corrective pattern, in which waves W and Y had an exact 1:1 ratio.
Currently, Bitcoin is attempting to move above the midline (red circle) of the descending parallel channel. Doing so would be a strong sign that the correction is complete.
For Be[in]Crypto’s previous bitcoin (BTC) analysis, click here
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Source: https://beincrypto.com/bitcoin-btc-reclaims-21000-support-area-after-falling-from-24000/