Bitcoin (BTC) has seen a 5% increase in the last 24 hours, bouncing back from a new local low of $76,450 to reach a peak of $83,786 on March 12.
Looking at the weekly chart, BTC has tested its 50-week exponential moving average (50W-EMA) indicator (shown by the blue line) as a support level.
Bitcoin 1-week chart.
The chart demonstrates that Bitcoin has consistently stayed above this indicator since August 2023, indicating a long-term bullish position. The 50 EMA has served as a support level for Bitcoin throughout the past 18 months.
Previously, Bitcoin had a rebound from this trendline in September 2024 before progressing to new all-time highs.
Bitcoin exhibits several bullish divergences
Before its recent recovery, Bitcoin’s low time frame (LTF) and high time frame (HTF) charts displayed notable bullish divergences between the price action and the relative strength index (RSI) indicator.
Bullish divergences occur when the price sets a lower low while the RSI forms a higher low, indicating that bullish momentum is increasing, possibly reversing the prevailing bearish trend.
Bitcoin bullish divergences across various charts.
The presence of bullish divergences on the 15-minute, 1-hour, 4-hour, and 1-day charts suggests a heightened chance of a short-term rebound.
Furthermore, the RSI indicated a higher low on all those charts after dropping below the 30 mark, which signifies the oversold territory. This condition suggests diminishing sell pressure, with potential buyers ready to intervene and reverse the trend.
A bullish divergence on the daily chart is particularly uncommon. Since 2020, BTC has demonstrated a similar pattern only six times (including the current instance), each time indicating a market bottom. The last divergence was observed between July and August 2024.
Related: Observations indicate high-entry buyers may be creating sell pressure, potential price ‘floor’ at $70K
In addition, Bitcoin’s recent dip below its prior lows at $78,150 captured all available liquidity on the downside, enabling the price to rebound past the $80,000 threshold.
Data from the liquidation heatmap indicates that Bitcoin has cleared downside liquidity, leaving over $250 million in leveraged positions on the upside, particularly between $85,000 and $87,000. Hence, it is possible for Bitcoin to rise toward this range in the coming days.
Bitcoin 1-week liquidation heatmap.
Bitcoin inverse head and shoulder points to $88K
On the 1-hour chart, Bitcoin has recently formed an inverse head and shoulder pattern, which suggests confirmation if a candle closes above the neckline level of $83,800.
Bitcoin 1-hour chart.
If Bitcoin breaks decisively above this neckline, it could retest a higher price range. The target of this pattern indicates a potential 7% increase from the neckline, placing Bitcoin at $89,000.
This target aligns with the Fibonacci retracement levels at 0.50 and 0.618, based on Bitcoin’s recent lower high of $96,450 and lower low of $76,560.
Related: Four indicators suggest $76.7K Bitcoin might be the ultimate low point.
However, this bullish pattern would be invalidated if the BTC price falls below $78,500. Such a drop would undermine the current higher-high bullish structure observed in the lower time frame.
A crypto analyst noted a similar perspective, anticipating price consolidation around resistance levels between $86,000 and $88,000. However, owing to a significant demand zone between $74,000 and $70,000, the trader forecasts a potential price decline leading to new lows in the forthcoming days or weeks.
Bitcoin short-term analysis.
This content does not constitute investment advice or recommendations. All trading and investment moves carry risks, and readers should perform their own due diligence prior to making any financial decisions.