Title: Bitcoin Attempts to Breakout From Short-Term Bullish Pattern

Aug 03, 2022 03:54 AM ET

By: AnalysisWatch

Bitcoin is currently making a third attempt to break the short-term downward wedge to resume its upward movement.

Bitcoin has been in a downtrend since hitting a high of $24,669 on July 30. So far, the downward movement has been contained within the descending wedge.

The descending wedge is usually considered a bullish pattern, which means it leads to breakouts in most cases.

On August 2, prices bounced off the 0.5 Fib retracement support level at $22,650 and headed higher, coinciding with a horizontal support area. BTC is now attempting to break above the descending resistance line.

If BTC breaks the wedge, the nearest resistance zone will likely be reached at $23,650. That target is the 0.5 Fib retracement resistance level.

The six-hour chart shows that BTC has been trading above the rising support line since June 19, having last bounced off it on July 26. This led to the aforementioned high of $24,669 on July 30.

Initially, it looked like Bitcoin had broken above the $23,750 area, but it has since dropped below it, turning it into just an outlier.

The most likely wave account suggests that Bitcoin has begun a third wave of a five-wave uptrend. A significant upside is expected if the count is correct.

The sub-wave count is shown in black. It shows the price completing sub-wave two, after which an equally large sub-wave three is likely to follow.

This appears to be a 1-2-1-2 wave formation, but a decline below the rising support line and the 0.618 Fib retracement support level at $22,230 would invalidate this particular wave count.