Can Bitcoin (BTC) Sustain Its Rally this time? Price Analysis

Bitcoin (BTC) broke out of a descending channel on Tuesday but upside progress thus far has been slow. Can Bitcoin sustain this rally, or will the bears bring this one back down just as has happened ever since the all-time high?

$BTC higher high or back to support?

Source: TradingView

When one considers that the descending channel has come all the way down from the all-time high (top left of chart) and that this is the first serious breakout in that time, it does prompt the view that the $BTC price may finally have bottomed. If there is another leg down, and this takes the price to a lower low, it would most likely be market makers forcing one more flush out of the long positions before sending the price back up.

As it stands, the breakout has occurred, it has been confirmed, and it might be expected that the price rises from here. The first big target for the bulls is a higher high which can be found at $113,500. This would provide a confirmation of the break of trend and would put all eyes back on Bitcoin again.

That said, this may not happen quickly. The short-term Stochastic RSI indicators are generally at, or approaching the top of their range limits and this might be why the current rally could be starting to falter.

The Stochastic RSI indicators in the 4-hour time frame are rolling over, as can be seen in the chart above, and so there might be some sideways and downwards price action that leads $BTC back towards the $108,300 support.

One more dip according to Renko candles?

Source: TradingView

The Renko candles are used above in order to give an uncluttered view of the trends. The Renko candles aren’t affected by time, but by price, so this smooths out all the minor fluctuations. A red or green ‘brick’ will only be added if the predefined price amount is reached. 

As can be seen in the chart above, the price is currently in a downtrend. However, strong support is underneath. There is room for one or possibly two more red bricks to the downside, but as soon as a green brick is printed the odds would be in favour of a new trend.

The Stochastic RSI also works with Renko candles, and it can be noted that the indicator lines are on their way back to the bottom. Looking left, one can see what happened the last time they started to rise back up.

Enveloping candle or dip to $105,000?

Source: TradingView

The weekly time frame shows a reasonably sized green candle based from the horizontal support. It remains to be seen how this will look come the end of play on Sunday. If the candle continues to grow and is able to envelop the previous red candle, this would be extremely bullish and would no doubt bring the bulls back into control.

Another scenario, and this could be more likely, is that the price just manages to hold above the support by the end of the week. This would give the Stochastic RSI indicators time to fully bottom, auguring the next upward impulse.

Finally, the bear scenario is that this rally fails and that the candle becomes another red one. That said, even in this scenario, the Stochastic RSI indicator is still likely to signal upside momentum in the next couple of weeks or so. Could this mean that the $BTC price drops to $105,000 before that trend change?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.