At the time of writing this article, the price of Bitcoin was fluctuating below $29,000 and trying to rise again. We have been experiencing a period of calm before the storm in terms of price movement. These periods are usually critical as they often lead to major breakthroughs. On the other hand, the price of USDT continues to remain below $1. The fear initiated by the CEO of Binance is now growing with the allegations against Huobi.
Bitcoin (BTC) price has been trading in the range of $31,000 and $28,000 for a long time. The prolonged movement between these support and resistance levels indicates that a major breakthrough is imminent. The upcoming breakthrough will determine the direction of the price.
Both the weekly and daily time frame readings have been uncertain. The technical analysis on the weekly time frame provides mixed readings for BTC. On the bullish side, the price has been rising along a support line since the beginning of the year. During this period, we have seen two lower highs with long lower wicks that confirm the rising support line. Both of these are considered strong bullish signals. The support line is currently at $28,000.
However, the price also formed a long upper wick bearish candlestick in July, confirming the $31,000 horizontal range as resistance. The divergence in the weekly RSI also supports the possibility of a downward move.
Similar to the weekly time frame, the 6-hour time frame provides an uncertain reading as well. Since July 13, BTC has been experiencing a downward movement within a descending parallel channel. Such channels usually involve corrective movements, indicating a possible breakout from the channel. The fact that the price is trading at the upper part of the channel increases the likelihood of an increase. If this happens, the $31,000 resistance could be tested.
However, the resistance line rejected the BTC price yesterday. If this initiates a downward movement, a 5.5% drop to the $27,500 region, which is the support line of the channel, is likely. With the current lack of demand, prevailing FUD in the market, concerns about future inflation data, and increased energy prices inflating August inflation, the bears have a lot of cards in their hands.
So what will happen after the breakout? If the $31,000 resistance is unexpectedly surpassed, it is likely that the price will reach $35,000. In the opposite scenario, the Bitcoin price could drop to $25,000.