Key Takeaways
On July 14, Bitcoin saw increasing buying activity as the crypto market calmed down. At press time, the reigning crypto king finds itself in a rectangular channel, moving between key support and resistance levels. Should Bitcoin stay within this channel, the bears could be in for a trap for the second time this year.
Will the bears be caught off guard by the bulls, or will Bitcoin retrace its newfound gains?
Bitcoin printed its first bear trap in January 2024, when BTC dipped below the $42,000 support level. The bears were expecting lower prices but were caught off guard when the price reversed upwards, leading to a sharp upward movement back into the established channel and later breaking out. This incident underscored the strength of the support level and the market’s bullish sentiment at that time.
Now, in July, Bitcoin is potentially printing out its second bear trap, as it momentarily dipped below the $60,400 support level. Like the price action in January 2024, Bitcoin once again slipped below the $60,400 support only to quickly recover, signaling stronger buying interest and a rejection of lower prices. This rebound has pushed the price back into the channel between the $60,400 support and the $72,000 resistance.
Bitcoin must hold above $60,400 to confirm the second bear trap. Should its price struggle to maintain this level, BTC could print another lower low.
The price action in BTC/USD has clearly defined its support and resistance levels:
The monthly BTC RSI chart offers additional insights:
The monthly BTC RSI chart offers additional insights:
Bitcoin’s RSI hovered around the 65 mark at the time of writing, below its long-term descending resistance. Historically, breaking past this level has led to significant bullish runs. Although the RSI at this level indicates Bitcoin is overbought, there is an opportunity for more upside price momentum.
In previous instances, Bitcoin saw RSI breakouts above the moving average on the monthly time frame in June 2016, October 2016, June 2019, October 2021, January 2024, and now July 2024.
Given the technical setup:
The BTC/USD price chart shows a structure characterized by support at $60,400 and strong resistance at $72,000. The recent bear traps and subsequent recoveries illustrate strong market confidence. While the short-term outlook appears bullish, the medium to long-term prospects depend heavily on breaking key resistance levels and overcoming RSI trendline barriers.