Key Points
- Bitcoin has experienced a near 15% rally over the past two weeks, bouncing back from its $55.8k support level.
- The cryptocurrency’s derivates data suggests a slight bullish edge for the long term.
Bitcoin has seen a significant rally of close to 15% in the last two weeks, bouncing back from a support level of $55.8k. This rally has seen Bitcoin enter a zone of relatively high liquidity, which has aided the cryptocurrency in reclaiming a position above the 200-day EMA.
Despite the current bullish edge, any drop below the 20 and 50-day EMAs could potentially delay short-term recovery prospects. Bitcoin recently experienced a breakdown from a bullish chart pattern after reaching the ‘Point of Control (POC)’ – a level generally characterized by the highest trading levels at specific price points.
A Rising Wedge Breakdown
Bitcoin has been oscillating between $55.8K and $71.6K for over four months. The cryptocurrency’s last rebound from the upper boundary of this range led to a nearly 21% monthly downturn until 6 July. However, the bulls re-entered the market, sparking an upturn from the $55.8K support level.
This resulted in Bitcoin forming a classic rising wedge on its daily chart, a pattern that often indicates a short-term trend reversal. As expected, Bitcoin experienced a breakdown after the pattern approached the POC level.
Derivatives Data Indicates Bullish Edge
Despite recent price drops, the dominance of long positions suggests that market sentiment among smaller traders remains somewhat bullish, or hopeful for a recovery. This is reflected in the cryptocurrency’s derivatives data. The RSI has seen a steep downtrend, but has not yet closed below the 50-mark, which would confirm a decrease in buying pressure.
While the price action is currently above the 20, 50, and 200-day EMAs, any decline below the 20 and 50-day EMAs could trigger a downtrend towards the $60.3K support level. However, it’s likely that Bitcoin would rebound from this support level, given the confluence of the support levels.
