Bitcoin Breaks Out of Bullish Structure: Regains Key Bull Market Trendline

Up nearly 7% from the bottom, the $BTC price has broken out of a bullish falling wedge structure and has regained the key bull market trendline once again. Can the upside push continue, or will an overbought condition lead to a fall back to earth?

Breakout, but into overbought territory

Source: TradingView

The 4-hour time frame reveals the breakout from the green falling wedge structure, leading to the $BTC price getting back above the bull market trendline. However, given the oversold nature of the price on all the short-term time frames, the resistance at $62,260 may be the limit for the upside this time around.

It now remains to be seen whether the $BTC price will eventually just fall straight back down, perhaps even making a new low, or if the bulls will be able to arrest this next potential slide at $60,000 and post a higher low.

No breakout volume as yet

Source: TradingView

The daily chart gives us the full perspective of the falling wedge and the breakout. One important factor in this breakout so far is the volume. Looking at the volume profile near the bottom of the chart it can be seen that volume is average so far. For a big breakout one would expect a real spike in volume.

That said, the Relative Strength Index (RSI) is showing a bullish divergence to the price action. Now would appear to be a good time for this divergence to start playing out. 

Precarious weekly candle, but bullish divergence building

Source: TradingView

The weekly chart illustrates how the weekly candle is in a precarious position - still below the resistance band and with only the weekend to go before the close. With a potential short-term corrective phase about to kick in, the probabilities are of a close below the resistance, as well as the bull market trendline.

All this said, bullish divergence persists into this time frame as well. As price action falls, the RSI indicator line is climbing. At some point, this could well be the divergence that signals the beginning of the next bull market.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.