Bitcoin (BTC) price formed a bull trap and formed a bearish divergence in the daily RSI, which could drop towards the $26,500 support area.
Bitcoin (BTC) Creates Bearish Divergence
Bitcoin fell after hitting a yearly high of $30,978 on April 14.
The move was triggered by a bearish divergence on the daily RSI (red line), a sign that usually signals a trend reversal to the downside.
If Bitcoin starts a deep correction, the price could drop to the critical support area of ​​$26,500.
BTC/USDT daily chart | Source: TradingView
bullish trap
After breaking below minor support at $29,700 on April 17, Bitcoin quickly regained that area on April 18 and formed a divergence below (blue circles). This is a bullish sign and usually leads to a strong rally.
However, BTC price was rejected by the $30,300 minor resistance area and fell below the $29,700 area again with a very high bearish engulfing candle.
The move trapped aggressive bulls who bought as BTC prices reclaimed the $29,700 area. Hence, a bull squeeze could ensue.
If so, BTC price could drop below the top of the previous range at $28,700 and drop to the next support level formed by the horizontal support and the midline of the range at $27,900.
As mentioned above, a break above this level would take the price down to the key support at $26,500.
BTC/USDT Hourly Chart | Source: TradingView
get conclusion
Bitcoin may have started a deep correction. The most likely target is $27,900 and even deeper to $26,500.
This view will be invalidated when Bitcoin reclaims the $29,700 area.
You can see the token price here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should do their research carefully before making a decision. We are not responsible for your investment decisions.
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