Although the price of BTC reached this year’s high on July 5, the subsequent price movement points to the possibility of further declines. This scenario is supported by wave analysis and the RSI indicator.
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BTC formed a bearish candlestick and fell
<As seen in the technical analysis of the daily chart, BTC plummeted right after it made its new yearly high near $31,500 on July 6.. On the same day it formed a "shooting star" candle. This is a type of bearish candlestick that occurs on local tops. It is characterized by a long top wick and a bearish close. That means that despite the upside, the sellers took over and sold the price well below the high and opening price.
It was also the candlestick that caused the bitcoin to close below the $31,500 horizontal resistance area.. This is another bearish signal that reinforces the significance of the “shooting star.
Source: TradingView
The daily RSI, on the other hand, is giving mixed signals. Recall, if the values of this momentum indicator exceeds 50 and the trend is upward, the buyers retain the advantage, and vice versa. In this case, although the RSI is decreasing, it is still above 50. Thus, the picture seems contradictory.
Wave analysis promises bitcoin to decline and then rise
Wave analysis of the shorter 6-hour chart suggests that the long-term outlook is bullish, but we should expect a decline in the short term.
In the meantime, wave analysis of the shorter 6-hour chart suggests that the long-term outlook is bullish, but we should expect a decline in the short term.
According to the wave chart, BTC has completed the formation of a five-wave bullish structure originating from the levels of June 15. If that’s true, then the price movement since the high of June 13 has been corrective (highlighted on the chart). The fact that the coin is moving within a parallel channel confirms this probability.
In this scenario, BTC could make a bearish breakout.
So in this scenario, BTC may make a bearish breakout from the channel and fall to the Fibonacci 0.382 level of $28,900 or even to the Fibonacci 0.5 level of $28,150.
After that, the previous long-term upward price movement could continue.
The six-hour RSI also supports the possibility of a bearish breakout. The indicator is declining and is below the 50 level. Both of these signals are indicative of a bearish trend.
Source: TradingView
Despite this bearish short-term outlook, a price exit beyond the high of the fifth wave at $31,500 would mean that the correction is complete and the trend is bullish. In that case, BTC is likely to make a bullish breakout from the channel and reach the next resistance at $36,000.