Bitcoin (BTC) decreased considerably on July 5, creating a bearish engulfing candlestick in the process.
This caused a breakdown from a short-term support line. However, BTC has reclaimed the line since.
Bearish engulfing candle
After BTC created a bearish engulfing candlestick on July 5, it proceeded to reach a low of $33,125 before bouncing.
Technical indicators are bearish. The MACD histogram has created a lower momentum bar (red icon) that could give a bearish reversal signal if there is another negative daily close.
While the Stochastic oscillator has made a bullish cross (green circle), the RSI is still below 50.
The closest resistance area is at $40,550 while the closest support level is found at $31,400.
Short-term BTC breakdown
The two-hour chart provides a mixed outlook. The previously outlined bearish engulfing candlestick caused a breakdown from a short-term ascending support line.
However, BTC has reclaimed the support line since.
In addition, technical indicators provide mixed readings. This is especially noticeable in the RSI, which is freely moving above and below 50. This is a sign of an undetermined trend.
However, a closer look aligns with the bearish outlook.
Firstly, the preceding decease looks impulsive (highlighted in red).
Secondly, BTC has been rejected right at the 0.618 Fib retracement level at $34,885. Therefore, a decrease back below this level would be the most likely scenario.
For the complete wave count, click here.