Over the last few days, bitcoin has broken out above its mid-term range between $21,700 and $29,370 and has begun to trend upwards.
In July, Carl Runefelt, a popular crypto entrepreneur across social media – Or better known as "The Moon", dropped a video on the new bitcoin trend. In this video, he identified the $20,000 area as the bottom of the dip.
Coincidentally, fear and greed (a crypto sentiment analysis tool) also confirm this.
Last week, it moved from fear to neutral and is now leaning again towards fear.
A good look at the daily bitcoin chart and upward would show that bitcoin has been in a downtrend since 2021. It has recently started its retracement from what many believe to be its bottom. Bitcoin hit the $19,500 level around mid-July and is now on what could be a slow but steady climb towards the upside.
This new breakout from its previous pattern means a lot of things concerning the medium to long-term future of bitcoin. For starters, the $21,500 area has now become the new support. This observation is especially valid because the daily RSI also increased above 50.
Although bitcoin's price surpassed $24,000 last week, there are concerns of a slight bearish divergence pattern.
The cryptocurrency, since reaching this point, has now started a retracement. Possibly towards the $21,500 level that has become its support.
This $21,500 level, many believe, will catapult the cryptocurrency upwards to the next resistance level around the $26,000 – $28,000 mark. The Fibonacci retracement tool also confirms this, with the 0.382 level.
A good look at lower chart timeframes would also support the observation that bitcoin may retest the $21,500 level that was created in mid-June.
On the four-hour chart, bitcoin is currently trading inside an ascending channel – One in which its support coincides with the same $21,500 level. The Fibonacci retracement on this timeframe also sits with its 0.5 – 0.618 levels between $22,200 – $22,700.
Bitcoin's trading pattern inside its overall descending channel can also be seen in the charts.
To many, this is also an overall bullish pattern because it means that a breakout is likely to occur at some point, followed by a strong bullish movement to the upside.
To summarize the wave theory, it might be easy to think of it like this: In any uptrend, a cryptocurrency's price movement to the upside can be divided into a series of waves. These waves, when they occur, are promptly followed by corrections or retracements.
Considering this theory, bitcoin's wave count supports its movement to the upside. Currently, bitcoin has begun its third wave out of the expected five.
If the current wave analysis on bitcoin is correct, a fairly high movement to the upside is imminent since the third wave is usually the strongest and sharpest of all bullish waves 1, 3, and 5.
It is important to understand that nothing is guaranteed, especially in a highly volatile setup like the crypto market.
While all indicators point towards a bullish trend upwards in the coming days/weeks, a breakdown of the $21,500 level (0.618 fun level) would completely invalidate any existing analysis and create a strong downtrend towards the $19,000 mark or lower.