Bitcoin Reclaims Crucial Support Area

However, the price is moving very gradually inside a parallel ascending channel and has not shown strong indications that it will move in one or the other direction, making both a breakout or a breakdown valid possibilities.

Bitcoin Weekly Outlook

In the weekly time-frame, the Bitcoin price is still following a descending resistance line, in place since the 2017 all-time high. Last week’s candlestick was small and did not come close to breaching the resistance line or overhead resistance at $10,400. However, it was the first bullish candlestick after four successive bearish candles. Until the price reaches a close above the descending resistance line and $10,400 resistance area, the price movement is considered bearish.

Current Support

The daily chart shows that the price is still trading above the $9,250 support/resistance area, which has been in place since June of last year. While the price initially decreased below this area on June 25. 2020, it increased back above less than two weeks later, causing the previous movement to be a possible fakeout. The price is also trading above its 50-day moving average (MA), which has been a very good predictor of the trend up to this point. However, technical indicators are undecided. Volume is minimal, and the RSI is in the middle ground, so the direction of the trend is not yet entirely clear. Due to the fact that the price has reclaimed an important support area, a move towards the range high seems slightly more likely.

Short-Term Movement

The short-term chart shows that BTC is trading inside an ascending, parallel channel, suggesting that this entire move is more likely to be a correction than an impulse. If this is true, a breakdown from the channel would be expected. In addition, we can see that the price has been following a descending resistance line since July 9, when it reached a local high that coincided with the resistance line of the channel. If the line is broken, the price would be expected to move towards the middle of the channel to $9.400, and possibly the channel high at $9,600.

To conclude, the direction of Bitcoin’s trend is unclear. While the weekly chart is definitively bearish until the price breaks $10,400, the daily and hourly charts are not in alignment with each other. A breakdown below $9,250 would likely cause the short-term trend to become bearish. For our previous analysis, click here.