Bitcoin (BTC) has been retracing since July 30, but it is trading within a short-term bullish pattern and has reached short-term support.
The daily chart shows that Bitcoin has broken above a descending resistance line that has been in place since the end of March. Bitcoin exploded on July 18, but has not increased significantly since then.
However, BTC has broken out from the $21,750 horizontal area and subsequently validated it as support, and the daily RSI has risen above 50.
The RSI (green line) is currently developing a slight bearish divergence. This could lead to a short-term retracement to the $21,750 level area before any upside continues. The next closest area of resistance lies at $29,370. The target is the 0.382 Fib Retracement resistance.
The six-hour chart shows that BTC is still likely to follow the ascending support line created in mid-June. The line is currently intersecting near $21,800, in line with the previously outlined horizontal support area.
There is also Fib support between $22,250 and $22,700, created by the 0.5-0.618 Fib Retracement support.
The two-hour chart shows that Bitcoin has been trading inside a falling wedge since its local high on July 30. A falling wedge is generally considered a bullish pattern, meaning a breakout from it is likely.
BTC wave number analysis
The most likely wave number indicates that Bitcoin has started the third wave (yellow) of a five-wave upward move. If correct, a considerable increase is likely, as the third wave is usually the sharpest and largest of the five.
The subwave counts are shown in black, indicating that the price is completing a second wave, after which a sharp rise is likely.
Since this seems to be a 1-2/1-2 waveformA break below the ascending support line and the 0.618 Fib Retracement support at $22,230 would invalidate this particular count.
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