Bitcoin Price Analysis

Bitcoin is currently hovering in a tightly compressed price range after failing multiple times to break above $110,000 earlier this month. The past few days have seen the leading cryptocurrency trading around $105,000, with neither bulls nor bears gaining control. Despite the overall consolidation, a subtle yet significant signal is starting to appear beneath the surface, particularly on the 4-hour chart, suggesting Bitcoin might soon reach a new all-time high.

Return Of Rare Divergence Pattern On Bitcoin’s 4H Chart

Crypto analyst Luca (@CrypticTrades_) recently shared a chart on social media platform X, highlighting an important technical development on Bitcoin’s 4-hour timeframe: the return of a bullish divergence. This signal, which previously surfaced in early April, preceded the massive rally that propelled Bitcoin to its May 22 all-time high of $111,800. The same divergence is forming again, indicating another potential Bitcoin price breakout.

The divergence is illustrated in the 4-hour candlestick chart below, showcasing a mismatch between price action and the Relative Strength Index (RSI). While the price forms lower lows, the RSI expresses higher lows. This indicates that selling momentum is fading, and a reversal to the upside may follow. The last appearance of this pattern led to a sharp move from a $74,000 low in early April to over $111,000 within weeks.

What Does This Divergence Mean For Bitcoin’s Price?

Bullish divergences on mid-timeframe charts like the 4-hour are often the first reversal signals when supported by rising volume. In Bitcoin’s case, the appearance of this pattern could signify that the recent retracement from $111,800 has run its course. With the RSI trending upward even as the price dips slightly, Bitcoin may be in another hidden accumulation phase before its next upward movement.

If the pattern holds true to its prior performance in April, Bitcoin could be gearing up for another push towards new all-time highs. Currently, Bitcoin is only about 5.5% away from its peak. Thus, a strong breakout could aim beyond the previous high of $111,800.

While Bitcoin’s price remains relatively stagnant for now, the bullish divergence serves as a reminder of the potential for rapid change. The previous bullish divergence resulted in a 50% price surge, and a similar move from the current level could target above $160,000.

At the time of writing, Bitcoin is trading at $105,700, up by 1.4% in the past 24 hours, showing signs of the bullish divergence signal coming into play.