Bitcoin (BTC) has broken out of a short-term corrective pattern but is trading within key horizontal and Fib support levels.
Bitcoin has been trading below a descending resistance line since April 5th. The line prompted multiple denials, most recently on June 7. This led to a longtime low of $17,622 on June 18.
Bitcoin has been moving higher since then and was able to break out on July 18th. Despite the breakout, it has returned to the resistance line again for possible confirmation as support.
Furthermore, the daily RSI has almost returned to its bullish divergence trendline (green line). For the breakout to remain intact, the RSI needs to bounce off this line (green icon) and continue its move higher above 50.
If that is the case, the closest area of resistance would likely be $29,370. That target is the 0.382 Fib retracement resistance level.
Brief collapse
The two-hour chart shows BTC breaking out of a descending parallel channel that has existed since July 20. This is somewhat unusual as such channels usually contain corrective moves.
Despite the breakdown, the price is currently trading within the $21,000 support, which is both a horizontal support area and the 0.618 Fib retracement support level.
Furthermore, the 2-hour RSI is oversold. The last time it was at this level was on July 12 (green icon) and preceded a significant move higher.
BTC wave count analysis
The most likely short-term wave count suggests Bitcoin is in wave two (yellow) of a five-wave uptrend.
The number of partial waves (black) shows a complex WXY correction pattern where the W and Y waves had an exact 1:1 ratio.
As for the longer-term count, it appears that BTC has completed a five-wave down move above the entire descending resistance line outlined earlier. In it, wave five was cut off.
If correct, it means that Bitcoin has hit a local bottom and is likely to continue to rise.
To be[in]Crypto’s previous Bitcoin (BTC) analysis can be found here
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