Bitcoin, the leading cryptocurrency, has been trapped within a narrow trading band after multiple unsuccessful attempts to surpass $110,000 earlier this month. Despite this, an underlying signal of potential strength is making its presence felt on the 4-hour chart, hinting at a possible move to a new all-time high for Bitcoin.
Bitcoin’s 4H Chart Reveals Emerging Bullish Divergence
Crypto expert Luca (@CrypticTrades_) recently shared a chart on social media, pointing out a critical technical pattern on Bitcoin’s 4-hour chart: the re-emergence of a bullish divergence. This trend, which last made an appearance in early April, was followed by an impressive Bitcoin rally that led to its May 22 all-time high of $111,800. The divergence pattern is now reappearing, suggesting that another Bitcoin price surge could be imminent.
The 4-hour candlestick chart below clearly illustrates the divergence between the price action and the Relative Strength Index (RSI). While the price is setting lower lows, the RSI is exhibiting higher lows. This discrepancy is often a precursor to a potential reversal to the upside. The previous occurrence of this pattern catalyzed a swift rise from a $74,000 low in early April to above $111,000 in mere weeks.
Implications of the Divergence for Bitcoin’s Future Price
Bullish divergences on mid-timeframe charts like the 4-hour are often early indicators of a reversal, particularly when accompanied by increasing volume. In Bitcoin’s case, the resurgence of this pattern could suggest that the recent pullback from $111,800 has reached its end. With the RSI trending upward while the price inches slightly lower, Bitcoin might be currently in a stealthy accumulation phase, readying for the next upward move.
Considering the pattern’s historical performance, Bitcoin could soon make another run at record highs. Currently, the coin is only about 5.5% away from its peak price. Consequently, a breakout similar to the one witnessed in April could easily eclipse the previous high of $111,800.
Although Bitcoin’s price is relatively steady for now, the presence of this bullish divergence is a reminder of the cryptocurrency’s volatility. The last bullish divergence resulted in a 50% price jump. A similar outcome from the current price level would see a target above $160,000.
As of now, Bitcoin is trading at $105,700, up by 1.4% in the past 24 hours, already providing early evidence of the bullish divergence signal taking effect.
