BTC/USD: Probable Corrective Waves 1D (Aug. 03)

X Force Global Analysis:

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In this analysis, we analyze Bitcoin's daily chart, exploring its bullish and bearish probabilities through technical analysis.

Analysis

- To begin with, Bitcoin is trading within a large ascending wedge shape pattern
- It has been rejected by the strong psychological resistance at 12k, but at the same time, has managed to secure its support at 10.5k multiple times
- While the trend overall is quite bullish, there are some technical factors to take not of:
- Counting Elliott Waves, we can see count Elliott Impulse Waves (12345) leading up from the breakout
- The Impulse waves have formed in a parabolic trend, which is unsustainable
- As a corrective wave would be in play, we could expect Bitcoin to correct further down to significant support levels, and possibly even to fill the CME gap at 9.8k
- The Relative Strength Index (RSI) is only slightly below overbought levels
- The Moving Average Convergence Divergence (MACD) looks for a potential death cross with decreasing bullish histograms
- Interestingly, however, a drop to 9.8k levels would still be technically bullish on the mid-long term
- The Simple Moving Averages (SMAs) are aligned in the following orders: 20, 500, 100, and 200 SMA
- The Ichimoku cloud support rests below the trend line support

Market Sentiment:

Long short ratios are at 69 to 31, with still more long positions than shorts, indicating a significantly dominant bullish sentiment.

What We Believe

A correction is inevitable in parabolic movements such as the one we have witnessed for the past few days. In essence, while Bitcoin is looking bullish long term, technicals suggest that a correction is overdue, and whilst a correction could take place potentially down to 9.8k levels, this would still be considered bullish on the longer term.

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