Bitcoin Price Rises 31% From August Lows — Can BTC Break Free From 174-Day Trading Range?
Has Bitcoin Bottomed? | Credit: Hameem Sarwar
Key Takeaways
- Bitcoin’s (BTC) price has traded inside a descending parallel channel for 174 days.
- The Bitcoin price has recovered since its August lows, regaining 31% of its value.
- When will BTC move out of this pattern, and what will the direction of the move be?
Bitcoin has climbed steadily since dropping to a low of $49,000 on Aug. 5, saving a breakdown from a long-term pattern in the process.
So far, the price has traded inside this channel for 178 days and moved above its midline last week.
Has Such a movement happened before in Bitcoin’s history, and if so, can we use it to project the future movement>
Analyzing the Channel
Bitcoin has decreased inside a descending parallel channel since its all-time high of $73,072 on March 14. During this time, this channel’s resistance and support trend lines have been validated several times.
The most recent touch of the resistance was on July 29 while that of support was on Aug. 5. The latter was especially interesting since it took the price of BTC way below the support trend line, to a low of $49,000.
However, Bitcoin created a very long lower wick (white icon) and bounced, reclaiming the channel’s support. Then, on Aug. 23, Bitcoin moved above the channel’s midline, another sign of a bullish trend.
As of today (Aug. 26 2024), the price of Bitcoin has increased over 31% since the August lows.
To top it off, both the daily RSI and MACD have generated bullish divergences, supporting the bounce and possibility of a breakout.
Has This Happened Before?
The most recent time a similar movement transpired was from April to September 2023.
At that time, Bitcoin traded in a 192-day ascending parallel channel before breaking out. At present, BTC has been in a channel for 186 days.
An identical feature of both movements is that the increase started after a failed breakdown below the channel’s support trend line (white), which was combined with a bullish divergence in the RSI and MACD (green).
Since the breakout from this channel started the rally toward the all-time high, it would bode well for the rest of 2024 if a similar movement were to happen.
Future BTC Price Outlook
We established that the price action and indicator readings are bullish. In addition to this, the wave count also suggests a breakout and new all-time high are likely.
In the most likely count, BTC has just started the fifth and final wave of an increase starting in Nov. 2022. The August 2024 Bitcoin price low fits all the criteria for a fourth-wave pullback:
- It was made in the middle of a long-term channel connecting waves one and two (white).
- It was made at the 0.5 Fibonacci retracement support level (yellow).
- The bounce left a long lower wick.
So, BTC may have started the fifth and final wave of this increase. If so, the first target for the high is between $89,200 and $100,400.
The 1.61 Fibonacci retracement of wave four creates the lower range of the target, while the upper range is created by giving wave five the same length as wave one.
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