Bitcoin's price briefly pulled back to $64,600, a move the source described as likely reflecting weak sentiment in the U.S. stock market, before the rally that began at the start of July appeared to resume. The initial target for the latest bounce is a higher high above $67,000, with market participants watching whether buyers can maintain momentum.

Bounce forms as market eyes next higher high

Source: TradingView

On the 4-hour chart, Bitcoin ($BTC) ultimately bounced from a shorter-term trendline. The move leaves the price in a constructive position provided it can confirm above the key $65,600 resistance level.

The next objective for buyers is to push $BTC to a higher high just below $67,000 for the current wave of price action. A further move to $67,250 would take out the main higher high established in mid-June.

If the current smaller upswing loses momentum, however, the price could fall back inside the ascending channel. In that scenario, the breakout attempt could turn into a fakeout after the effort made by buyers. A return toward the bull market trendline could then become the downside target for sellers.

Daily chart shows Bitcoin at a critical level

Source: TradingView

The daily chart shows Bitcoin in an important technical position. The source said conditions remain favorable for a bounce from the top of the descending channel after confirmation of the breakout. Such a move would also likely push the price back through the key $65,600 horizontal resistance and toward a higher high within the trend.

Still, the opposite outcome remains possible. If Bitcoin falls through the combined support of the channel top and the short trendline, the price would probably return at least to the bull market trendline. A revisit of the bottom of the channel and a new bear market low could also come into view.

Weekly close and stock market conditions remain key

Source: TradingView

With most of Friday and the weekend still ahead, the weekly candle close is the main factor being watched. A close above $65,600 would be a significant outcome for buyers and could leave the path open for a $BTC move above $73,000, the next major resistance level—an area near Bitcoin's March 2024 all-time high.

Large holders, or whales, were said to have been accumulating as the price fell to $60,000 and below. More recently, U.S. spot Bitcoin ETFs have returned to inflows, according to Coinglass. A run of seven consecutive buying days was broken only on Thursday, after several weeks in which outflows had dominated. Since their approval by the SEC in January 2024, spot Bitcoin ETFs have become a closely tracked institutional demand signal.

The U.S. stock market remains another important factor. Thursday was a weak session after Tesla and Google fell sharply following their earnings announcements, with MSN reporting that Tesla and Alphabet lost hundreds of billions of dollars in value in the post-earnings stock plunge. The source said that if AI-related stocks come under pressure, there may be less support for the broader equity market, and Bitcoin would not be able to maintain its current rally in that environment. Bitcoin has traded with a meaningful correlation to risk assets and technology stocks through much of 2024, making equity market volatility a key variable for crypto traders to monitor. The S&P 500's ability to recover on Friday was highlighted as a point to watch.

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.