Introduction
Following our previous analysis from November 2024, Bitcoin hit our anticipated $110,000 target, delivering a massive 30% rally. However, since then, the market is showing signs of exhaustion, with price pulling back to around $93,690 (-15%).
Technical Analysis
Bearish Divergence on RSI
- The RSI (14) shows a clear bearish divergence, where the price reached new highs but RSI failed to confirm, pointing to weakening momentum.
- The RSI currently stands at 47.91, indicating a cooling off after recent overbought conditions.
Short-term Retracement Underway
- Bitcoin is consolidating below the $100,000 psychological level. This pullback could either serve as a healthy correction in an uptrend or signal the start of a deeper retracement.
Moving Averages as Support
- The 50-day SMA at $85,427 and 200-day SMA at $69,320 are key dynamic support levels to watch. A bounce off the 50-day SMA would reaffirm bullish momentum, while a drop below could trigger further downside.
Bullish Case: Higher Highs in Sight
- Trend Continuation: As long as Bitcoin remains above the 50-day SMA, the primary bullish trend remains intact.
- Higher Highs Expected: A consolidation above $90,000 and a reclaim of $100,000 would likely pave the way for a retest of the recent high at $109,085, with potential to move toward $120,000.
- Strong Fundamentals: Institutional interest and positive sentiment surrounding the crypto market under the Trump presidency continue to provide tailwinds for Bitcoin.
Bearish Case: Deeper Retracement
- Key Level at $85,427: A decisive break below the 50-day SMA at $85,427 would increase the probability of a test of the 200-day SMA at $69,320.
- Divergence Warning: The bearish divergence on RSI suggests that the recent rally may have been overextended, raising the likelihood of a deeper correction.
Trade Ideas 💡
Long Setup – Continuation
- Entry: Buy near the 50-day SMA ($85,427) upon confirmation of a bounce.
- Target 1: $100,000 (psychological resistance).
- Target 2: $110,000-$120,000 (extension targets).
- Stop Loss: Below $83,000.
Short Setup – Breakdown
- Entry: Sell below $85,000, targeting the 200-day SMA ($69,320).
- Target 1: $80,000 (intermediate support).
- Target 2: $70,000 (200-day SMA).
- Stop Loss: Above $88,000.
Outlook & Summary
- Short-term (1-2 weeks): Bitcoin may continue its retracement toward $85,000, with the 50-day SMA acting as critical support.
- Medium-term (1-3 months): If the $85,427 level holds, the bullish trend remains intact, and Bitcoin could resume its climb toward $120,000. A failure to hold this level would signal deeper correction risks.
- Long-term (3+ months): The bullish thesis remains valid as long as Bitcoin stays above the 200-day SMA. A break below would shift the focus to $70,000.
