What Does Technical Analysis Tell Us About Bitcoin Prices?

Bitcoin prices trade within a reasonablely defined range. This state has been maintained for many weeks.

According to coinDesk, the world’s most popular digital currency trades largely between $30,000- $42,000 since May.

After reaching a new, all-time high in April of over $64,000, it has continued to follow this trend, according to additional CoinDesk data. It then lost much of what it gained by 2021, CoinDesk figures show.

The cryptocurrency is still experiencing a relative slump. Technical analysts are weighing in on when the volatility might increase.

[Ed Note: Investing cryptocoins and tokens is highly risky as the market is not regulated. It is possible to lose all of your investment.

The ‘Calm Before The Storm’

Kiana Danial CEO of Invest Diva stated that ‘We are clearly at a consolidation phase, which can also be referred to as the ‘calm before storm’. “This means that we will soon see a breakout.

She elaborated on the statement and provided analysis that indicated that bitcoin’s current momentum was a little bearish.

Danial stated that the BTC/USD pair is still below the daily Ichimoku cloud but has fallen below the 4-hour Ichimoku cloud. This indicates that the bearish pressure remains stronger than the bullish.

“Additionally, the pair formed lower highs over the past month, which indicates that the bearish sentiment may be slightly stronger than the bullish.”

David Keller, chief market strategist for StockCharts.com offered a similar perspective.

He stated that the Bitcoin chart has been in distribution mode from April with successively lower momentum peak on each rally over three months.

“I would expect that the path of least resistance will remain lower due to the weak momentum characteristics.”

A bullish assessment

Nick Mancini, research analyst at Crypto Sentiment Data Provider Trade the Chain, offered a bullish perspective over the above experts.

He stated, “Looking at Bitcoin’s future, it is possible to see a glimpse bullishness on its price chart,”

“The Bollinger Bands are (BBs) currently tightening around Bitcoin’s recent movements. This is typically a signal for a large price change. Mancini stated that the current trading price is on the lower bound and may change in the future due to the sentiment spike.

He also noted that there was an inverse head-shoulder formation.

The ‘Inverse head with shoulders have two shoulders, one head, and a neckline. They are typically bullish when the neckline breaks. The 200-Day Moving Average is the neckline in this instance, and has been a reliable indicator of Bitcoin price action since June.

Levels to Watch

Market observers continue to watch bitcoin’s price movements. Analysts weigh in on what levels of support or resistance they should be looking out for.

Mario Gomez Lozada is the CEO of trading platform PowerTrade. He noted that “BTC has been consolidating between 0.0.618 and 0.0.5 fib levels, which has created strong bearish or bullish cases.”

He said that if BTC prices break down the support level of 30-31k it could drop to the next fib support level at around 24.8k. This can potentially touch long-term trend line (yellow at 20k).

Keller mentioned similar numbers and stated that:

“Bitcoin’s fall has been moderated in May and June, as the price has maintained support at $30,000.” Breaking below this support level could signal a new influx in selling, which could cause Bitcoin to drop as low as $20,000

The analysts did however mention important resistance levels that the digital currency might encounter.

Keller stated that a break of $40,000 would reverse the downward trend seen in recent months, and indicate further upside.

“First, Bitcoin must surpass trendline support by using the most recent highs of the hourly chart (currently around $34,000).”

Lozada stated that if the digital asset exceeds $39,000 by the end of the month, it will “break out to the upside very quickly” as it continues its bull run.

He stated that bitcoin could have significant upside because the Bollinger Band was very stretched.