Bitcoin price has risen from $16,499 on January 1 to $23,860 on January 29. This ascent constitutes a 45% gain and could be coming to an end due to three reasons.

 The daily chart shows that January 29 produced a ‘down’ candlestick with a -3.86% return. Since this candlestick completely overshadowed the previous ‘up’ candlestick, a bearish engulfing candlestick is formed. Typically, if this structure forms at the end of a rally, it denotes the start of a retracement or a steep correction.

RSI Divergence: The bearish engulfing candlestick is not a standalone pattern, with the Relative Strength Index (RSI) also continuing to slip lower since January 14, signaling a declining momentum while the asset continued to soar higher. This non-conformity eventually results in a trend reversal favoring bears.

Risk line: Lastly, we have the Momentum Reversal Indicator (MRI)’s risk line (blue) that has been breached by the Bitcoin price on the daily time frame. This level is present at $23,000 and is crucial in determining the direction of BTC. A flip of the risk line into a support floor often opens the path for the underlying asset to rally toward the next state trend resistance level, and a breakdown could catalyze a move toward the immediate support barrier.

Due to these bearish factors, Bitcoin price could be preparing for a correction, steep or otherwise. The 50-, 100- and 200-day Exponential Moving Averages (EMA) at $21,211, $19,959 and $19,384, respectively, are immediate support levels. A sudden spike in selling pressure that pushes the largest crypto by market capitalization will send BTC down to these levels.

BTCUSD to experience a pullback from DEMA200

Jan 31 2023

Stop Loss -3.70%

Holding time 1d1hr

23215.60

Entry price

24074.60

Stop loss price