Bitcoin (BTC) has once again approached the key support area around $34,700. After revisiting the $30,000 level last weekend, the price is attempting to resume its uptrend. Regaining this support area or confirming it as a resistance again can determine the future direction of the trend.
Bitcoin on the weekly chart
Last week, the Bitcoin price dropped to $28,600, an area not seen since January 2021. However, we soon saw a strong recovery and a retest of the $35,000 level. This move could be a sign of a trend reversal.
Bitcoin failed to close below the weekly support at the $32,250 area (blue line), so technically the structure of the long-term uptrend remains intact. Weekly technical indicators are bearish, but signals for bottom action can be seen.
RSI is trying to turn around in the neutral zone of the 44-48 range. At the same time, the indicator is approaching the long-term support line (blue), which dates back to December 2018 and was confirmed for the second time during the COVID-19 crisis in March 2020.
The MACD is falling sharply, but momentum has been weakening for the past two weeks with the red bars getting shorter. The indicator has not yet entered negative territory as it did in March 2020. The stochastic oscillator is in bearish territory below the 20 line and does not signal a possible rebound for now.
The daily chart provides a more upside view. Since May 19, Bitcoin price seems to have formed a descending triangle structure with the base coinciding with the $30,000 area. This domain has already been tested and approved as support several times. On June 13, there was a false breakout from this structure that confirmed the $40,500 level as resistance and returned to the bottom of the range. Currently, we are seeing another attempt to break out of the triangle and overcome the key resistance level at $34,700 (blue line).
Confirmed as resistance on June 24, this level has acted as support several times before. It also coincides with the falling resistance line of the triangle structure mentioned above. A break above this area will open the way for a retest of the resistance at $40,500.
Technical indicators seem to support the possibility of a breakout. First, the bottom at $28,600 helped create a lot of bullish divergences in the RSI, MACD and stochastic oscillator. We are seeing rising values in key indicators even though the price is posting a lower decline. Then, the MACD has been producing positive momentum bars for the past two days and is approaching to enter the positive territory. The stochastic oscillator has bounced back from the bearish zone and continues to rise in the neutral zone.
RSI is one of the most interesting looking indicators. Because it refused to fall into the bearish zone, but it is currently approaching the long-term resistance line (orange circle). This line stretches back to January 2021 and has already been tested four times. If the RSI breaks this resistance line, it could be a strong reversal signal.