The Bitcoin (BTC) Price Bounced Last Week, But Can It Break Out?
The Bitcoin price recently experienced a bounce, signaling a potential end to its month-long consolidation. However, BTC still needs to break out from a crucial descending resistance line in order to confirm a bullish trend reversal.
How Does Bitcoin’s Movement Compare to the Previous Cycle?
The current descent in BTC’s price since its November 2021 all-time high shares similarities with the period after the 2017 high. Both cycles saw bottoms reached after 12 months and temporary RSI decreases below 50 before eventual increases above 50.
In the previous cycle, BTC initiated a 340% upward movement that lasted for 180 days before correcting by 70% over 270 days. The price never closed below the long-term horizontal support of $6,500.
In the current cycle, BTC began a more gradual upward trend, increasing by 100% in 240 days and reaching a high of $31,800 in July.
Bitcoin Bounces After Bullish Divergence – Will It Break Out?
Technical analysis for the daily timeframe shows conflicting signs for BTC. The price has fallen since its yearly high of $31,800 and is currently contained within a descending resistance line. While there was a bounce after hitting this line, it failed to reach the resistance line itself, indicating weak bullish strength.
If BTC breaks out from the line, it could reach the next resistance at $29,200. However, failure to sustain the increase could lead to an 8% drop to the support level at $24,300.
The daily RSI provides mostly bullish readings with an increasing trend and a bullish divergence. This divergence suggests that despite price decreases, momentum is increasing and could result in a breakout.
Hot Take: The Future of BTC Price Depends on Breakout or Rejection
The future price prediction for BTC will largely depend on whether it can break out from the resistance line or if it gets rejected. A breakout could lead to an 8% increase, while a rejection could result in a 10% drop.
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