This is an update to my BTC analysis posted last week, summarizing the historical descending triangle and the significance of the support zone at $5875. I mentioned how Bitcoin could be ready for one more attempt to break the diagonal trend line formed since the peak at $19K earlier this year ($7100 range), otherwise it would fall straight through the floor into the $5K range.
Now more data has come in and I am happy to report that BTC is up approximately 12% since last week and following my chart line with scary precision. All eyes are now on the $7000 range where the diagonal trend line will either be broken or rejected.
Horizontal resistance is currently being met at the $6700 range where lows were formed in back in February and April, this is the first major obstacle on the road to breaking $7200. Considering this resistance was formed months ago, we can assume it will be difficult to break.
So how can we determine the chances of breaking through this resistance? I look to the momentum oscillators RSI and MACD on a smaller time frame.
4 Hour Momentum
Looking at the 4 hour chart, I immediately notice both indicators are showing lower highs relative to the price action over the last few peaks. Looking from early June however, we see a steady increase of higher lows indicating momentum has been building for a while.
MACD on the 4 hour is oscillating above the 0 line and the RSI is in a range of about 40-60. These two values indicate neutral / semi-bullish momentum in the short to mid-term, I will be concerned if lower highs continue on the oscillators or if the 0 line is broken on MACD.
2 Hour Momentum
Zooming in on the 2 hour data makes the lower highs on the momentum indicators more obvious. What is most interesting here is that momentum lost during 6/29-7/5 bounced back around 7/6 and 7/7 which supports the possible second push upward seen in the 4 hour chart.
Bottom Line
It appears BTC is well on its way to try and break $7200 and possibly set off the next major bull run. I will be keeping a close eye on momentum as price makes its way through the $6700-7100 range as the resistance here could prove critical.
The small bounce in momentum is promising which makes me bullish in the short to mid-term. Until price can break through current resistance my stance is neutral in the mid to long term.
