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Bitcoin Price Analysis: What to Expect After 10 Green Days But a Disappointing Weekly Close?


cryptopotato.com 02 August 2021 13:30, UTC
Reading time: ~4 m

After the false breakdown below $30k and the subsequent recovery, BTC continued higher, closing the week up 12.45%. Overall, price action has been bullish, as the cryptocurrency pushed above the 50-day MA and hit an intra-week high above the top of the trading range at $42.6k.

It’s important to note that BTC has printed 10 consecutive green daily candles, is extremely overbought and overextended on the 4-hour and daily chart. With near-term overbought conditions and price near resistance, it is completely normal to see consolidation and pullback before preparing for the next leg up. In fact, it is healthier for the market structure to “cool off,” which makes the rallies more sustainable.

Just hours away from the weekly close, BTC saw selling pressure which pushed the price back below the top of the trading range to close at $39.8k, signaling an initial failed breakout attempt. So far, during the pullback, just over 1300 BTC worth of longs have been liquidated – a small amount compared to previous drawdowns.

This might look bearish in some ways, but when considering a variety of bullish technical indicators, positive momentum, on-chain signals, previous price action in bull markets – they all suggest resistance at $40k will likely be retested soon and BTC setting up another breakout attempt.

Notable Highlights Bitcoin Accomplished This Week

Although bitcoin struggled to make a weekly close above the top of the 2-month long trading range, there have been multiple early bullish confirmations of a developing bottom and trend reversal.

The 4-hour chart shows early positive signals, especially with the 200-MA flattening and now starting to trend higher. This type of move has led to significant rallies in BTC on a mid-term basis.

The daily chart also shows bullish signals as the 21-day MA is sharply crossing above the 50-day MA. The charts show a high level of confluence very similar to October 2020, where multiple time frame momentum indicators were trending higher and turning bullish. The bullish crossover in October 2020 led to a significant rally and new all-time highs, as shown in the chart below.

BTC managed to make a 2-month weekly closing high at $39.8k, taking out the previous weekly closing high at $39k during the consolidation. It closed back above the 40-week MA, one of many important levels for bitcoin to reclaim.

Bitcoin Support & Resistance Levels to Watch

The past week’s gains can be defined as a follow-through higher, validating the bullish weekly hammer formed on the week of July 19th, 2021. On higher time frame charts, BTC made a very strong monthly close over the weekend, printing a very bullish monthly candle.

For the short term, BTC needs to hold support between $35k and $38.3k, especially the 50-day MA. If BTC closes below the 50-day MA, the probability of a drop to the lower part of the trading range will increase significantly. If this occurs, the risk of breaking below $30k will increase as support becomes weaker the more times it is tested. This is a scenario the bulls must avoid. The 50-day MA must hold support if tested.

As long as the technicals remain bullish, momentum holds, and trends higher, on-chain data continues to show strong accumulation, long-term holders and entities holding large amounts of illiquid supply. With exchange reserves continuing to fall, we could expect near-term support levels to hold with a retest of $40k for another breakout attempt.

Market participants should remain cautious and aware of external factors in the market such as how global equities perform, monetary policy, the price movement of the dollar (DXY), and any key developments because they all impact BTC and the crypto market depending on correlation.

With exchange reserves rapidly depleting, Onchain showing consistent accumulation, and declining exchange inflows, the long-term outlook for the largest cryptocurrency remains bullish. The market awaits Bitcoin’s next major move.



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