Bitcoin [BTC] Price Analysis : Will The Bearish Divergence Precede a Drop In Price?

The price of BTC/USD touched $4225 on February 24th, before generating bearish divergence in the RSI and the MACD and sharply breaking down. The following rebound ultimately proved unsuccessful and the price made a bottom near $3650. It has been trading inside a horizontal channel since. While it has made four attempts at breaking out above $3950, they all proved to be futile. The price has generated medium and short-term bearish divergence in both the RSI and the MACD.

Key Highlights:

  • There is major resistance near $4400 and minor resistance near $4000
  • There are minor support areas near $3800 and $ 3650.
  • The price is trading inside a horizontal channel
  • There is medium and short-term bearish divergence.

Bitcoin Price Analysis – BTC/USD – 2 Hours Chart

Bitcoin Price Analysis
Chart Source: Tradingview, Bitfinex

A look at the 2-hour chart shows us that after touching $4250, the price dropped sharply through a massive bearish engulfing candle on significant volume. The drop was preceded by bearish divergence in both the RSI and the MACD.  Price enjoyed an ultimately unsuccessful bounce, before ultimately breaking down to the support area near $3800, It has been trading inside a horizontal channel with resistance near $3900 for the past 12 days.

As for the indicators, the price is trading above the 50-period MA and right online with the 21-period MA, which are close to making a bearish cross. The MACD has made a bearish cross and is dropping. Furthermore, there is bearish divergence occurring in it and its histogram. Similarly, the RSI has developed significant bearish divergence.

BTC/USD – Price Analysis – 30 Minutes Chart

Bitcoin Price Analysis
Chart Source: Tradingview, Bitfinex

A look at the 30-minutes chart shows that after the drop, price bottomed at $3800 and created a support area near $3650. It has made four unsuccessful attempts at breaking out above $3990. It is possibly creating an ascending support line, which however has only been validated twice.

As for the indicators, the RSI was at 87 for a short period, indicating overbought conditions. However, while price reached a higher high on Mar 6, the RSI did not, creating bearish divergence. The bearish divergence has also occurred on the MACD, which has made a bearish cross. The divergence has continued for three days, reaching very significant levels.

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