Bitcoin (BTC) is at the neckline of a short-term inverse head and shoulders pattern, a breakout above which could greatly accelerate the rate of increase.
BTC has been falling underneath a descending resistance line since April 5. After being rejected on June 7, the price continued decreasing until June 18 at a low of $17,622.
The price has been increasing since, and created a higher low on July 3. Similarly, the RSI has created a higher low and moved outside of its oversold region.
However, neither the RSI nor the price have broken out from their respective descending resistance lines. The resistance line is currently at $22,000.
Short-term BTC pattern
The six-hour chart shows that the price could be at the neckline of an inverse head and shoulders pattern. This is considered a bullish pattern that usually leads to bullish trend reversal.
Currently, BTC has reached the neckline of this pattern. A movement that travels the entire length of the inverse head and shoulders would take the price to $25,000 (black arrow). Therefore, it would cause a breakout from the long-term descending resistance line. The most likely wave count does suggest that a bottom has been reached.
The six-hour RSI is also bullish. It previously generated bullish divergence (green line), and its trendline is still intact. Additionally, the indicator has moved above 50 in what is considered a sign of a bullish trend.
Finally, the two-hour chart shows that BTC has broken out from a descending resistance line and made three unsuccessful attempts at moving above the $20,600 resistance area.
Since resistances get weaker each time they are touched, an eventual breakout from this area is expected. This is also in line with the readings from the six-hour chart.
Furthermore, the RSI has found support above 50, indicating that the short-term trend is bullish.
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