Bitcoin (BTC) is barely holding onto the bottom of a corrective pattern and a minor horizontal support area. A breakdown below them could be the catalyst for a sharp downside move.
Bitcoin has been moving inside an ascending parallel channel since 18 June. Movement inside the channel led to a local high of $25,211 on August 15th, but the price could not sustain,
On August 20, Bitcoin bounced off the $20,900 horizontal support area and the support line of the channel and has been mostly rising since then.
RSI faces resistance
Despite the bounce, BTC is still trading at the bottom of the channel. Besides, the six hourly RSI was rejected by the 50-line (red icon) and has started to move down.
When combined with the fact that there are usually corrective movements in channels, it is more likely that the rise is corrective and that Bitcoin will eventually break out.
If the price breaks below the $20,900 area and the channel support line, it could drop all the way to $19,000 and possibly even lower.
short term btc movement
The two-hour chart is showing that BTC has broken above a descending resistance line (dashed). However, it failed to sustain the upward momentum and even failed to reach the 0.382 Fibonacci retracement resistance level. This is considered a sign of weakness as the breakout failed to lead to any significant upward move.
Furthermore, the entire trend that caused the breakout is contained inside an ascending parallel channel. As mentioned earlier, such channels usually have corrective activities.
A breakout of the short-term channel could see the price drop back below the long-term descending resistance near $19,000.
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