Bitcoin (BTC) price formed a bearish pattern and formed a bearish divergence in the daily RSI, which could drop towards the $26,500 support area.
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. The last time the indicator showed such a signal was on February 21, after which there was a sharp drop (red ellipse).
Additionally, Bitcoin formed a bearish engulfing pattern (blue circle) on April 19. This is a bearish pattern that shows that the bears are currently in control of the price action.
Therefore, bitcoin price could drop to the critical support area of $26,500.
BTC/USDT daily chart | Source: TradingView
break the momentum
After a sharp drop, Bitcoin price is now retesting the resistance at $28,700 which it broke earlier, which may help the price rebound. The hourly RSI also supports this possibility, as it forms a bullish divergence within the oversold region.
However, as we analyzed yesterday, Bitcoin creating a bull trap could lead to a subsequent bull squeeze.
Therefore, BTC price may retest the $29,300 resistance area before continuing lower.
The nearest target on a break below $28,700 is $27,900, formed by horizontal support and the mid-line of the range.
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
The most likely scenario is for Bitcoin to break below $28,700 and drop to at least $27,900.
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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