Despite the decline in Bitcoin price, the recovery in technical indicators is noteworthy. This divergence seen on the weekly chart last appeared in the bottom region after the FTX collapse. While the latest outlook keeps the possibility of an upward reaction on the agenda, it also indicates that downside risks have not completely disappeared.
Rare signal on weekly chart
As of Monday, Bitcoin’s weekly relative strength index, or RSI data, rose above the 34 level. In response, the price dropped from $75,770 to around $63,000 in about two weeks. The recovery of the momentum indicator as the price moves lower is considered a positive divergence in technical analysis.
Mini dictionary: RSI is a technical indicator that measures the speed and strength of price movements. In general, levels below 30 are considered oversold, and levels above 70 are considered overbought.
Although this structure indicates that the selling pressure may have begun to weaken, it does not provide a definitive direction confirmation on its own. If this signal is confirmed on the weekly chart, it will be only the second time in Bitcoin history that such an appearance has occurred. The first example was seen after the FTX crash in November 2022, and there was a strong rise afterwards.
While analyst Michael van de Poppe identified the 200-week simple moving average as the ideal zone for accumulation, he stated that Bitcoin must first rise above the $64,000 to $65,000 range for a stronger bullish confirmation.
90 thousand dollar region is on the agenda again
In the technical outlook, the first significant upside target is the $91,755 level, where the 50-week simple moving average is located. This line has worked as a strong resistance zone in recovery attempts in the past. The current positive divergence has produced a converging target to this level, leading to a retracement of the area above $90,000.
Bitcoin is also holding around the 200-week simple moving average. This level, currently at approximately $62,000, stood out as the bottom zone at the end of the 2015, 2018 and 2020 bear markets. Therefore, the current price behavior is occurring within a historical support area that some analysts are watching carefully.
Van de Poppe stated that if the 64,000-65,000 dollar region is exceeded, the price may move towards the 71,500-73,000 dollar range, and then the 79,000 dollar level, where the CME gap is located, may come to the fore. In the same assessment, he identified the area above $90,000 as the next important resistance zone.
Downside risks remain on the table
On the other hand, despite the positive signals, the fact that the formation known as the bear flag on the weekly chart is in the breakout phase keeps the risk of decline alive. This structure occurs when, after a sharp decline, the price recovers for a short time within the ascending parallel channel and then breaks down again.
The fact that Bitcoin has fallen below this channel is likened to the weak outlook seen after the symmetrical triangle breakout in 2022. If the formation continues to work, the conservative target points to below $50,000. Therefore, if the price fails to regain the lower trend line of the flag as support, it is likely that the downward pressure will continue.
