Bitcoin (BTC) has formed a bullish pattern with its first high low since June 18. The daily RSI is yet to confirm a bullish trend reversal.
BTC has been falling below a descending resistance line since April 5. The line recently declined on June 7 (red icon), leading to a June 8 low of $17,622.
The price has gained a bit since then and is currently trading above $20,000. The formation of three Bullish candlestick patterns on June 19, 23 and July 4 respectively (green symbols) is a bullish development.
If the upward move continues, the above resistance line will lie at $20,200.
Potentially Bullish RSI
A closer look at the daily movement shows a possible double bottom pattern formed between June 18 and July 3 (green icon), with a second bottom slightly higher below. The double bottom is considered a bullish pattern.
Furthermore, the pattern is aligned with a bullish divergence in the RSI. If the RSI were to break out of its descending resistance line and then move above 50, it would confirm that the trend is bullish. This would be expected to lead to a breakout from the longer term descending resistance line.
The two-hour chart is showing that BTC has broken above a descending resistance line. Currently, it is trying to move above the $20,400 horizontal resistance area. This area is in between the 0.5-0.618 Fibonacci Retracement resistance levels, which is gaining importance.
The two-hours RSI is above 50, which supports the continuation of the upward move.
A breakout above the $20,400 area would be expected to move the price towards the descending resistance line mentioned earlier.
wave count analysis
Most likely, the longer term wave count shows that there will be a considerable bounce.
For the short-term one, there are two main possibilities. The first indicates that the price has completed a five wave downward movement (yellow), with the fifth wave being shorted. If true, there will be a lot of bounce.
The second count also indicates that the five-wave downward motion has been completed. However, instead of being cut off, the count starts from the previous lower height.
Although it initially looked like BTC was still in Wave Four, the fact that Wave Four would be more than three times the length of Wave Two makes it highly unlikely.
Therefore, a move towards a long-term descending resistance line seems to be the most likely scenario.
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