Last week bitcoin was in a falling wedge pattern. As we started this week, there was a strong bullish breakout. However, the rally stalled at the 640 support/resistance pivot and fell, invalidating the bullish breakout, and suggesting further consolidation.
BTCUSD 4H Chart 7/17
Today, price at first continued to consolidate but ended with a strong upward push that engulfed the previous session’s price action, as you can see in the 4H chart. This push can be a sign that bulls are indeed taking over, albeit not enough yet to break out of the overall consolidation that has been evolving throughout the month.
Although price is still stuck between the moving averages in the 4H chart, as well as a the consolidation channel, there are a few signs the market is ready to take off.
1) Today’s low respected the 200-period SMA in the 4H chart and stayed above last week’s low. This suggests that bears are no longer confident.
2) At the first half of consolidation, the bearish you saw some strong bearish 4H candles with mostly indecisive bullish ones. This week, there have been stronger bullish candles than bearish ones. This suggests bulls are starting to enter the market with force, and this might break BTCUSD to the upside.
3) The RSI has tagged 70, and has held up above 40 for the most part in July. This reflects the fact that bullish momentum is still in play.
We might still need one more push to gather more confidence in the BTC-bulls. A break above 631 should clear the falling channel resistance as well as the 100-period SMA in the 4H chart.
Failure to push above 631 would maintain the current consolidation mode. In this consolidation mode, there is downside risk towards 600. Even then, the overall trend since June would be valid, so watch out for buyers if BTCUSD does approach 600.
To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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