The price of Bitcoin (BTC) has created a bearish pattern and confirmed a bearish divergence in the daily RSI indicator, which could push it down to the support level of $26,500.
Bearish pattern
Bitcoin has declined after reaching a new yearly high of $30,978 on April 14.
This move was triggered by a bearish divergence in the daily RSI indicator (red line), a signal that often precedes a trend reversal to the downside. The last time this indicator signaled such a divergence was on February 21, and a significant sell-off followed thereafter (red ellipse).
In addition, Bitcoin has formed a bearish engulfing pattern on April 19 (blue circle). This is a bearish pattern that shows the bears is currently in control of price action.
Therefore, the price of Bitcoin is likely to decline to the important support level of $26,500.
Breakdown potential
After the sharp decline, the price of Bitcoin is currently testing the previous range resistance at $28,700, which could support for a bounce. The hourly RSI indicator also supports this potential by forming a bullish divergence within the oversold range.
However, as we analyzed yesterday, Bitcoin’s bull trap could lead to a subsequent long squeeze.
Therefore, the BTC price is likely to retest the resistance level of $29,300 before continuing its downward move.
The nearest target after breaking below $28,700 is $27,900, formed by the horizontal support range and the middle line of the range.
Breaking this level would lead to a drop to the important support level of $26,500, as mentioned above.
Conclusion:
The most likely prospect is that the Bitcoin price will break below $28,700 and drop to at least $27,900.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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