Bitcoin (BTC) has run into strong resistance as it struggles to break past the downtrend line, but overall conditions indicate that this rally is now over. RSI on the BTC/USD chart above is trading in a rising wedge and has now reached the upper limit of the wedge. The IFT Stochastic also indicates a pull back as it has topped out. EMA alignment for BTC/USD continues to remain bearish. This indicates that the price is due for a pull back in the near future and is expected to correct in a downward direction. As the volume continues to dwindle with every passing day, it is reasonable to expect that this fall to $5,800 or lower will be a steep one.
Bitcoin (BTC) seems to have misled some investors into thinking that the price is in the clear and that the downtrend is over. This perception was fueled by rumors of a Bitcoin ETF being around the corner. However, as the charts indicate, Bitcoin (BTC) is in fact preparing for its biggest fall in weeks. This has only happened thrice before. The first time Bitcoin (BTC) touched $5,800 was in mid November last year. The second time Bitcoin (BTC) touched $5,800 was in February when the price nosedived all the way from $20,000. The last time it has happened was in June as the price found a short term bottom after an extended correction. This time, such a correction is expected to complete by late August or early September. This would also coincide with favorable long term bullish indicators on the weekly and monthly charts for BTC/USD.
Bitcoin (BTC) could still make a new ATH for the year, but so far the price action looks extremely weak. A quick glance at the BTCUSDLONGS chart above clearly shows that Bitcoin Longs (BTCUSDLONG) has broken below the ascending channel for the first time since the beginning of this correction. This is a strong indicator of weakening bullish sentiment. RSI and Wave Trend analysis for BTCUSDLONGS shows that the price is likely to continue downwards as the bulls lose momentum. It also shows that most investors are finally convinced that Bitcoin (BTC)’s downtrend is not over yet and that further downside can be expected in the weeks ahead.
Bitcoin Shorts, BTCUSDSHORTS on the other hand has demonstrated a strengthening price action and is likely to shoot up in the days ahead. RSI for BTCUSDSHORTS is trading in a falling wedge, a bullish indicator which means that the number of Bitcoin Shorts can be expected to rise in the days ahead. The wave trend for Bitcoin Shorts also seems to have reached bottom and is expected to begin another cycle soon. Meanwhile, the number of Bitcoin Longs continues to be higher than the number of Bitcoin Shorts. However, it is clear that the bulls are losing faith and the bears are getting stronger, despite the recent short squeezes that have liquidated millions of dollars worth of short positions in a matter of seconds.