Fakeout or Breakout? Technicals Suggest Bitcoin Is Bound For a Correction

Bitcoin's weak price movement hit a crucial point in July. As the trading range narrowed over time, BTC's price reached the lowest volatility ever seen in its 11-year history. according to to arcane research.

"With just 11 days left in July, we are currently seeing the narrowest monthly price range in Bitcoin history! We have never seen such a low price range (currently 6%), with the all-time low starting at May 2015 at 9%," said one data-driven analytics company.

Arcane Research's monthly price range of Bitcoin

Bitcoin's Monthly Price Range Hits New All-Time Low. (Source: Arcane Research)

Even so, the flagship cryptocurrency started off with a bang on Tuesday. The price rose 2.90% to hit an intraday high of $ 9,440. The bullish price movement has inspired many market participants for the future of Bitcoin, but a certain technical index suggests that the upswing could be part of a fakeout.

The TD sequence becomes bearish at low time frames

The sequential indicator Tom Demark (TD) was crucial in determining Bitcoin's price action. This meter was not only able to anticipate a sharp drop in BTC in mid-February, but also showed a buy signal in mid-March, leading to an increase to $ 10,000 before halving.

After the pioneering cryptocurrency has seen significant gains in the past few hours, the TD setup estimates that a pullback is in progress.

Based on BTC's 45-minute, 30-minute and 15-minute charts, the renowned index presented sell signals in the form of green nine candlesticks. These bearish formations predict a correction of one to four candles or the start of a new countdown downwards.

Bitcoin US dollar price chart

TD Setup Presents Sell Signal For Bitcoin Across Multiple Time Frames. (Source: TradingView)

A red trade in two candles under a previous red candle within one of the aforementioned periods can serve as confirmation of the pessimistic outlook.

Massive retaining wall ahead

When sell orders pile up, the IOMAP (IntoTheBlock) model suggests that there is a significant supply barrier that could prevent a sharp decline in Bitcoin. Based on this on-chain metric, the range between $ 9,130 ​​and $ 9,400 is on the main supporting walls before the cryptocurrency.

Around this price level, around 3 million addresses had previously bought almost 1.80 million BTC.

Holders within this price range can try to remain profitable in the event of a downturn. You can even buy more Bitcoin so the price can go up again.

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Massive Support Barrier Ahead of Bitcoin. (Source: IntoTheBlock)

On the other hand, the IOMAP cohorts show that approximately 1.20 million addresses over 800,000 BTC bought between $ 9,420 and $ 9,700. If Bitcoin is able to overcome this hurdle, it could likely resume the upward trend of the past few hours.

Featured Image by Depositphotos
Price tags: btcusd
Chart from TradingView.com

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