Bitcoin (CRYPTO: BTC) fell to the $35,255 level on Friday before bouncing higher in tandem with the general markets, which the crypto sector has become tied to recently.
The tables may be turning for Bitcoin because the crypto has developed strong bullish divergence near oversold territory on the daily chart.
Bullish divergence occurs when a stock makes a series of lower lows over a specific timeframe, while the relative strength index (RSI) oscillator makes a series of higher lows. Divergence suggests that the bulls are regaining control and can mark an imminent reversal of a downtrend.
Divergences are best used when combined with other signals and patterns on a stock or cypto’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 RSI reversed course on April 11, and has since made a consistent series of higher lows, while the crypto’s price has declined over 15%. Although Bitcoin’s RSI has climbed, it’s measuring in at about 36%, which indicates the crypto is near oversold territory, which also points toward a bounce being imminent.
- Bitcoin has been trading in a falling channel pattern on the daily chart since March 28 and on Friday the crypto tested the bottom descending trendline of the formation and bounced. The reaction to the bottom of the pattern combined with the bullish divergence may have provided some bullish traders the confidence needed to enter into a position.
- If Bitcoin closes the trading day above the $36,000 level, it will print a hammer candlestick, which could indicate higher prices will come on Saturday. If the crypto falls down to close the trading day near its low-of-day price, it could indicate lower prices are in the cards.
- Bitcoin has resistance above at $38,105 and $39,600 and support below at $35,593 and $32,300.
See Also: Why Bitcoin- And Ethereum-Related Stocks Are Getting Hammered Today
