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Technical Analysis – BTCUSD’s rocket rally runs out of steam

  • BTCUSD at the highest levels in more than a year

  • Overbought conditions threaten a negative reversal

  • Sellers could come back into play below 41,770


BTCUSD (Bitcoin) had a rocket start to the week, stretching its uptrend from September’s low of 24,915 to a one- and-a-half year high of 44,497 on Thursday before turning slightly negative.

The price seems to have created a bearish evening star candlestick pattern at the top of the uptrend, flagging a potential downside reversal as the RSI is losing impetus within the oversold area.

That said, the bulls may not give up, unless the market weakens below the ascending lines from August and October 2023 at 41,770 and 42,800, respectively. If that bearish scenario unfolds, the decline could strengthen towards the 38,960-39,670 area, where the 20-day simple moving average (SMA) and a couple of trendlines are positioned. Even lower, the bears might push for an outlook deterioration below 37,830, though only a continuation below 36,770 and beneath the 50-day SMA could intensify selling forces.

If the bulls set a strong foothold around 42,800, they might bounce up to reach the 45,500 barrier and the broken support line, which connects the 2021 and 2022 lows at 46,100. Additional gains from there would shift the spotlight straight to the 2022 resistance zone of 47,300-48,500.

In summary, BTCUSD is at risk of a downside correction, as the bulls seem to be running out of fuel. Selling forces could intensify below 41,770.

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