Early Technical Signals Suggest a Larger Bitcoin Rally Potentially Coming (Price Analysis)


Since the false breakdown below 30k and back up, BTC has shown signs of an early trend reversal. This week’s close (on Sunday – midnight) is definitely a one to watch closely, as it will likely determine the next major direction for BTC.

The first bullish signal was the low volume close below $30k on July 20th. On-chain data strongly suggested that short-term holders, retailers, and small miners were selling, while larger entities continued to accumulate and hold.

Bullish Momentum Continues Post B-Word Event

Following the B-Word event where prominent figures like Elon Musk spoke, BTC consolidated and successfully retested a near-term downtrend line at $31.7k. Afterward, the primary cryptocurrency started its next push higher.

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7-Month Downtrend Finally Broken

The most recent price increase managed to finally push the daily RSI above the 7-month descending trend-line, which started forming in January 2021, confirming a breakout in the Relative Strength Index. This is a very bullish signal in momentum, judging by past performance.

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Additionally, BTC made a strong daily close above the 21-day MA, 100-MA, and 200-MA on the short-time frame’s 4-hour chart.

This is a near-term bullish signal that is likely to expand into the mid-term. If bullish momentum continues, the next area of interest is the 50-day MA, which lies around $34.3k.

A strong close, followed by high volume, above the latter, is likely to spark another wave of capital entering the market as we have yet to see higher volume.

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Another notable bullish technical signal is BTC making a daily close above the middle band on the Bollinger Band, as shown below. BTC struggled since mid-June to successfully push above this middle band.

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The Weekly Timeframe: Hammer Candle Is Forming

The weekly chart also shows strength as BTC is currently forming a large Hammer candle, a signal technical analysts identify with potential bottoms and trend reversals. It is crucial for BTC to make a weekly close at the highs, print a hammer candle, which is textbook bullish, and then follow through to the upside the next weekly candle. Pushing higher next week will help validate the weekly hammer.

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For many weeks, on-chain data showed strong bullish signals of accumulation even while BTC struggled to push higher, retesting the lows of the trading range amid $30K.

This week’s price action and improving technicals can be interpreted as a gradual validation of the bullish on-chain data.

At this stage, the mentioned above early bullish signals need further validation, such as successful retest of the near-term support, increasing volume during rallies, and on-chain data continuing to show strength in market participants and the Bitcoin network.

Overall, the bulls should be glad to see this week’s price action, but there’s still a long way to go, particularly breaking out of the trading range and reclaiming the upper area of the 2-month trading range at $40k – $43k.