Bitcoin’s Record High: A Closer Look at the Charts
As the world watched Donald Trump take office, Bitcoin surged to unprecedented heights, breaching the $109,000 mark. However, the cryptocurrency’s gains were short-lived, as the new U.S. president failed to mention it in his inaugural address or subsequent appearances. This lack of acknowledgment led to a swift correction, leaving investors wondering what’s next.
A Weekend of Bearish Signals
Over the weekend, two ominous candlestick patterns emerged on Bitcoin’s chart, hinting at a potential downturn. The shooting star pattern, which formed on Monday, suggests a possible reversal, while the preceding bearish engulfing pattern reinforces this bearish sentiment. Furthermore, a bearish divergence between the price and relative strength index (RSI) has formed, indicating waning price momentum.
Key Levels to Watch
As Bitcoin’s price action unfolds, three crucial support levels come into focus. The first, around $92,000, aligns with the early-November peak and several pullback troughs formed between late November and early January. A close below this level may trigger a move down to $87,000, where investors could seek buying opportunities near the bottom of a pennant pattern. Failure to defend this level could lead to a more substantial drop to around $74,000, an area supported by a multi-month horizontal line and the rising 200-day moving average.
Overhead Resistance Ahead
If Bitcoin continues its upward trajectory, investors should keep a close eye on the $106,000 area, where the cryptocurrency has struggled to stage a decisive close above since mid-December. Beyond this, the $120,000 area may pose significant overhead selling pressure, coinciding with a measured move price target calculated from the cryptocurrency’s recent rangebound trading activity.
A Cautionary Note
While Bitcoin’s record high is undoubtedly impressive, investors must remain vigilant, as the charts suggest a potential move lower. By monitoring these key levels and staying attuned to shifting market sentiment, investors can make informed decisions in this volatile market.
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