BTC/USD Technical Analysis (1-Hour Chart): Approaching Support — Reversal or Continuation?

Market Overview and Current Price Action

As of July 21, 2025, BTC/USD (Bitcoin/US Dollar) continues to trend downward on the 1-hour chart, with the price currently trading around $116,900. After pulling back from the $120,000 zone earlier in the week, bearish sentiment has spread among traders. Now, the pair is testing a critical support level coinciding with the 200-period simple moving average (SMA).

At this juncture, it’s crucial to determine whether the market is merely staging a minor rebound or preparing for a full-blown trend reversal. Using technical analysis, we’ll evaluate future price action by examining moving averages, MACD, ADX, volume, and market sentiment.

Moving Average Analysis: Crossovers Between 50MA and 200MA

The 50-period moving average (blue) is sloping downward, and the 200-period moving average (red) has shifted from an upward trend to a flat configuration, reflecting weakening bullish momentum. A potential “death cross” — where the 50MA crosses below the 200MA — is forming, indicating continued bearish bias in the short term.

Currently, the price is testing the 200MA. A successful defense here could lead to a short-term rebound, but a break below would likely trigger more downside. Moving averages remain one of the most reliable indicators in identifying market trend direction and dynamic support/resistance.

MACD Behavior: Bearish Momentum Persists

The MACD line (yellow) continues to stay below the signal line (red), with the histogram remaining in negative territory — signaling sustained selling momentum. While the rate of decline in both MACD and histogram has slowed, there’s no clear signal of reversal yet.

Traders should watch for MACD convergence with the signal line as a potential early indicator of bullish momentum. The MACD is especially useful for visualizing trend momentum in short-term trading setups.

ADX Analysis: Diminishing Trend Strength

The ADX (Average Directional Index) has declined into the low 30s from the 40s seen earlier in the week. While a value above 25 still signals the presence of a trend, the decline suggests weakening trend strength — and potentially a transition into a consolidation or sideways phase.

When the ADX drops while the trend continues, it often precedes a reversal or range-bound behavior. More details on ADX can be found here.

Volume Analysis: Signs of Accumulation at Support

Volume has increased near the $116,500 level — indicating potential accumulation activity. When volume rises at a support zone, it suggests buyers are stepping in and preparing for a possible rebound.

This type of "volume-backed support reaction" is critical when confirming a level’s validity and can precede short-term bullish reversals, especially when paired with candlestick confirmation.

Support and Resistance Levels Breakdown

Market Sentiment and External Factors

The BTC/USD trend remains sensitive to macroeconomic data such as U.S. inflation indicators and Federal Reserve interest rate policies. While some risk-on sentiment has returned due to signs of easing inflation, Bitcoin has yet to reestablish a solid upward trajectory.

Upcoming economic events, including U.S. jobless claims and the PCE deflator report, could introduce short-term volatility. These external events must be monitored closely as they can strongly influence trader positioning in crypto markets.

Conclusion: Three Key Takeaways for Traders

• The price is currently testing the 200SMA — a critical technical support level.
• MACD and ADX both indicate a continuation of the bearish trend, though momentum is slowing.
• The $116,500–$118,500 range is a crucial short-term battleground. A confirmed breakout from this range could define the next directional move.

BTC/USD is at a pivotal technical juncture, where both bulls and bears are closely watching for the next signal. Trading strategies should include confirmation-based dip buying near support, or momentum-following entries if support fails.

Short-term traders may focus on the 1-hour chart for entry signals, while swing traders should consider combining insights from the 4-hour chart for broader trend alignment.

Disclaimer: This content is for informational purposes only and does not constitute financial advice. Always conduct your own research before making any investment decisions.

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