Bitcoin Price Analysis: BTC Makes Impressive Recovery, But Still in the Danger Zone

In our most recent Bitcoin price analysis, we mentioned that Bitcoin was breaking down the mid-term ascending supporting trend line at around $11,200.

Since the breakdown, we saw Bitcoin plunge another $1,400 on the daily chart to reach the significant support at $9,800. This was mentioned here as a possible support area since the level contains the daily chart’s 50-day moving average line (marked in purple on the below chart). This is also the lower ascending trend line, which started forming sometime during the end of April.

We saw a beautiful reversal candle on the daily chart, accompanied by a decent amount of volume. However, Bitcoin is still in the danger zone.

As noted in our macro-level analysis, Bitcoin retested the seven-year-old ascending trend line (log chart) but from below, now as resistance.

Another thing to note is the RSI, which is producing lower highs on the daily chart. If the momentum indicator doesn’t break bullish, at least above the 52-53 level, this could forecast some short-term bearish action for Bitcoin.

Fortunately, the recent correction found support at $9,800, which is higher than the prior daily low of $9,600 (from July 2).

Total Market Cap: $288 billion

Bitcoin Market Cap: $191.7 billion

BTC Dominance Index: 66.6% (New 2019 high)

*Data from CoinGecko

Key Levels to Watch

Support/Resistance: From above, Bitcoin is facing the crucial $11,000 – $11,200 resistance area, which has a lot of supply. Breaking above and the next resistance area will be $11,500 – $11,600, along with the mid-term ascending trend line (the upper one). Above lies $12,000 and $12,500.

From the bearish side, the next support area lies at $10,600. Further below is $10,300, $10,000 and $9,800 (50-day MA). Below lies $9,600, which is the low of the current parabolic move, and $9,400 – a significant support level from the previous double top in June.

Daily chart’s RSI: Discussed above. The Stochastic RSI oscillator is in oversold territory, and hasn’t entered the bullish zone yet.

Trading Volume: Discussed above.

Bitfinex open short positions: In recent days, many bears have closed their short positions. There is currently 5.3K BTC worth of open short positions, which is near the yearly low. Keep in mind the recent sudden 65% drop in the shorts number.

BTC/USD BitStamp 4-Hour Chart

BTC/USD BitStamp 1-Day Chart