Bitcoin bearish divergence is raising alarm bells as an analyst warns of a significant downside risk. Both four-hour and daily bearish divergences are in play, suggesting the potential for a major drop in Bitcoin’s price.
Overbought Levels Reach Historic Highs
According to the analyst featured on The Moon Show, Bitcoin reached an overbought level in the third week of August that has only been seen a handful of times in its history. This rare occurrence suggests that the current rally may be unsustainable and could soon reverse. The analyst points out that such extreme overbought conditions often precede sharp corrections, heightening concerns about the immediate direction of the market.
Daily Bearish Divergence Hard to Invalidate
The analyst emphasizes that Bitcoin bearish divergence on the daily chart is particularly concerning. To invalidate this daily bearish divergence, Bitcoin would need to surge to $110,000 within a very short timeframe—a scenario the analyst considers highly unlikely. This technical barrier makes it difficult for bulls to regain control, leaving the door open for further declines. The analyst notes that the persistence of this divergence increases the probability of additional downward pressure.
Historical Patterns and Current Risks
Providing additional context, the analyst recalls that exactly one year ago, Bitcoin formed a bearish divergence and subsequently fell sharply from $126,000 to $57,000. This historical precedent serves as a warning for current market participants. With both four-hour and daily Bitcoin bearish divergence signals now present, the analyst believes the risk of a continued bearish trend is high. According to The Moon Show, the technical setup makes any reversal extremely challenging, reinforcing the bearish outlook for the near future.
This article reflects the channel author’s opinion and is not investment advice.
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