Bitcoin BTC/USD edged 1.44% higher at one point on Monday, after closing Sunday’s 24-hour trading session up 1.71%. At the high-of-day, Bitcoin ran into sellers and retraced to near flat, in tandem with the general market.
Bitcoin’s price may be struggling to move higher due to the bearish divergence that developed on its chart between Jan. 14 and Feb. 21.
Bullish divergence occurs when a stock or crypto makes a series of higher highs over a specific timeframe, while the relative strength index (RSI) oscillator makes a series of lower lows. Bearish divergence suggests that the bulls are losing control and can mark a reversal into a downtrend.
Divergences are best used when combined with other signals and patterns on a stock or crypto’s chart, because the existence of divergence doesn’t indicate when a possible reversal will occur.
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The Bitcoin Chart: Bitcoin’s recent downturn has caused its bearish divergence to correct because, on Friday, the crypto printed a lower low to negate its uptrend, while at the same time forming a lower low with its RSI oscillator. This doesn’t indicate that Bitcoin will trade higher in the near future, only that traders can watch for other signals to gauge likely price action.
- Bitcoin is trading in a downtrend since Feb. 21, with the most recent lower high formed on Thursday at $24,600 and the most recent lower low printed at the $22,520 mark on Friday. If the crypto trades lower during Tuesday’s 24-hour session, Monday’s high-of-day will become the next lower high within the pattern.
- Bitcoin could be settling into a bear flag on the daily chart, with the pole formed between Feb. 21 and Friday and the flag forming over the days that have followed. If the pattern is recognized, the measured move is about 11%, which suggests the crypto could fall toward $21,300.
- Bullish traders want to see Bitcoin close above the eight-day exponential moving average (EMA), which will negate the bear flag and cause the eight-day EMA to remain above the 21-day EMA. Bearish traders want to see a breakdown from the bear flag on higher-than-average volume.
- Bitcoin has resistance above at $24,206 and $25,288 and support below at $22,729 and $21,313.
Read Next: Bitcoin 'Beasted' In January, Now Analyst Says Ethereum Is Set To Lead Crypto Market In March
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