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Bitcoin (BTC) Recovers With Bullish Engulfing Candlestick, but Could Still Break Down

2 mins
Updated by Geraint Price
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In Brief

  • BTC has created a bullish engulfing candlestick.
  • It is trading inside an ascending parallel channel.
  • Potential bottom target would be at $13,213. 
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Bitcoin (BTC) is at the support line of a corrective pattern that has been in place since June 18. A potential breakdown would be expected to lead to new lows.

BTC has been moving upwards since reaching a low of $17,622 on June 18. So far, it has created two higher lows, doing so on June 30 and July 13, respectively.

On the latter date, it also created a bullish engulfing candlestick (highlighted). This is a type of bullish candlestick pattern that is expected to lead to bullish trend reversals. 

Additionally, the ascending support line of the daily RSI (green line) is still intact. This increases the legitimacy of the higher lows. 

The main resistance area is at $21,800, created by a horizontal resistance area and a descending resistance line.

BTC Engulfing
BTC/USDT Chart By TradingView

Short-term channel

The six-hour chart provides a more bearish outlook for two reasons. Firstly, the price is trading in the lower portion of an ascending parallel channel. Such channels usually contain corrective movements, meaning that an eventual breakdown would be expected.

Secondly, unlike the daily chart, the six-hour RSI has already broken down from its ascending support line. So, it is possible that the price will follow suit and break down from the channel.

Short-term channel
BTC/USDT Chart By TradingView

Future BTC movement

The wave count also supports the possibility that the price will break down from the channel and create a new low. The reason for this is that it seems that BTC is in wave five of a five-wave downward movement (yellow). 

Using the length of waves one and three, the first potential target for the bottom of this move is at $16,726. If the area fails to initiate a reversal, the next potential bottom target would be at $13,213. 

The long-term wave count also supports the possibility that another downward movement will follow.

BTC Channel breakdown
BTC/USD Chart By TradingView

For Be[in]Crypto’s previous bitcoin (BTC) analysisclick here.

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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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