Bitcoin price analysis for July 20-27: the bullish set-up projects a rally to $17,223
Two chart patterns on Bitcoin suggest that the next rally is likely to be a strong one
The biggest news last week was the hacking of Twitter profiles of several high-profile individuals, which resulted in the hackers scamming people for about 12 Bitcoin. A couple of years back, such news could have sent the Bitcoin price tumbling but, this time, the price hardly budged. This shows that the crypto markets have matured.
Also, Bitcoin’s range-bound action has not stopped the institutional investors from investing in it. Grayscale Investments has reported record inflows of $905.8m in the second quarter of this year, almost double that of the previous quarter. Interesting to note is that about 84 per cent of the inflows were from institutional investors.
However, for the past few weeks, Grayscale Bitcoin Trust has not purchased any Bitcoins. Although this looks like the inflows have stopped, Grayscale clarified that there “was an administrative quiet period” due to which no activity was seen but the trust had again opened for subscription on July 10.
Will Bitcoin shakeout from its slumber? Let’s do the Bitcoin price trend analysis of both the weekly chart and the daily chart to find out.
Bitcoin price technical analysis: weekly chart
Bitcoin remains stuck in a tight range. It slipped 0.97 per cent to end the last week at $9,213.50, which suggests a lack of interest from both the bulls and the bears as they are waiting for a trending move to start before jumping in.
Almost every volatility squeeze is followed by an expansion. Similar to a coiled spring, longer the squeeze, stronger will be the eventual snap out from it.
By now, the traders know about the large symmetrical triangle formation that is in place. However, if they look closely, they can find an inverse head-and-shoulders (H&S) pattern developing on the long-term charts.
This bullish set-up will complete after the BTC to USD pair closes (UTC time) above the neckline of the pattern, which is roughly at $10,550. If the breakout happens, the target objective of this set-up is $17,223.
However, it is unlikely to be a straight dash to the target because the bears are likely to mount a stiff resistance closer to $14,000 levels. But if momentum picks up, Bitcoin could surprise everybody.
While the chart patterns are positive, they can change quickly. Therefore, traders should also know when this assumption becomes invalid.
The bulls have been providing support at the moving averages for the past few weeks. If the bears can sink the price below the moving averages and the $8,000 support, a drop to $6,500 is possible.
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Until either of these situations play out, the Bitcoin price weekly analysis suggests that the range-bound action is likely to extend for a few more days. Are there any set-ups forming on the shorter-term time frame? Let’s do the BTC price analysis of the daily chart to find out.
Bitcoin price technical analysis: daily chart
Both moving averages are flat and the relative strength index is also close to the midpoint, which suggests a balance between supply and demand.
Although in a range-bound market, moving average signals are not effective still, when the price sustains below both moving averages it gives a slight advantage to the bears.
For the past few days, the price has been trading below the moving averages, which is a mild negative. If the bears can capitalise on this and sink the price below the immediate support of $8,813.60-$8,632.65, a deeper correction is possible.
Conversely, if the bulls can propel the price above $9,600 and sustain this level, a new uptrend could be on the cards.
How to trade Bitcoin this week
The weekly chart has formed bullish patterns while the daily chart is showing a mild advantage to the bears. Due to the uncertainty, it is better to wait for a decisive breakout or breakdown to happen before initiating a trade.
However, this does not mean that traders can be lax in their approach because the breakouts from tight ranges can be very sharp. Hence, traders should be ready to jump in when a breakout is confirmed.
FURTHER READING: Bitcoin explained simply: everything you need to know
FURTHER READING: Bitcoin vs Bitcoin Cash vs Bitcoin SV: the ultimate guide