Bitcoin Technical Analysis 02 July 2021
At the time of writing, bitcoin is threatening a further breakdown. It is now trying to hold the 0.618 Fibonacci retracement target (~$32,700) of the last swing high move. If bitcoin breaks below this level, the next downside target is the 0.718 Fib level at ~$31,500.
Let’s now look at the daily, 4-hour, and 1-hour charts to see what could potentially be next for bitcoin.
Bitcoin 1-day chart:
Bitcoin broke back below the downward diagonal trendline we discussed on Wednesday’s update. It has also fallen and closed below the 21-day exponential moving average (EMA). If you are bullish, this is a condition you would not have wanted to see.
The 21-day EMA is getting closer to the 50-day MA. But both of these moving averages still have a negative slope. In order to get a bullish cross, bitcoin needs to go up from here. The Bollinger Bands are also getting wider as bitcoin threatens the bottom side of the range, which suggests that a larger downside move is possible if we break it.
The daily MACD is also losing bullish momentum as bitcoin heads into the weekend, while the RSI is testing its upward sloping trendline. If this trendline holds, that would be one bullish scenario, as this would imply relative strength is building for the bulls.
But bitcoin must bounce fairly soon for that to happen.
Bitcoin 1 day chart. Taken at 03.49 AM London time.
Bitcoin 4-hour chart:
The 1-day chart shows bearish signs. But all is not lost if bitcoin can hold support above the 0.618 Fib retracement level. It wicked to this level overnight and is now looking to retest it again. As already mentioned, if the 0.618 Fib does not hold, the 0.718 Fib ($31,500) becomes the next downside target.
If that does not hold, then another retest of the range lows around $29,000 to $30,000 seems likely. Quick price wicks to those depths over the weekend would not be a death sentence, but a 4-hour candle close below them would likley signal a major breakdown.
For now, bitcoin is still holding the 0.618 Fib. A bounce anywhere around here would mark 3 touchpoints of an upward sloping RSI trendline. This would provide some hope for the bulls – at least of a shorter-term upside move. That said, a move to the range highs of around $41K can only be entertained if bitcoin first gets back above the previous swing high of about $36,700.
That’s a long way up from here.
Bitcoin 4-hour chart. Taken at 04.18 AM London time.
Bitcoin 1-hour chart:
If we are trying to clutch for bullish straws, the 1-hour chart may offer some comfort.
There is some confluence suggesting that the 0.718 Fib retracement level (~$31,500) might be a potential bottoming area. This is because $31,500 is also the technical breakdown target of bitcoin’s recent head and shoulders pattern. As the chart shows, bitcoin re-tested the neckline as those who shorted the top took profits. This is a classic “throwback” pattern.
If the 0.618 fails to hold, bitcoin is likely to reach the ultimate downside target of the head and shoulders pattern.
Bitcoin 1-hour chart. Taken at 04.27 AM London time.
Conclusion:
Bitcoin is moving around a lot as I write this. And by the time you read this a lot might have changed. There will no doubt be games over the weekend. But so long as bitcoin does not close 4-hour candles below about $30,000, the bulls still have a flicker of hope.
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Disclaimer: This is not investment advice, it is just my opinion on the bitcoin chart right now. I can and will be wrong because markets are not predictable. My opinion can and will change depending on what the chart does next.
