Bitcoin Faces Bearish Reversal as Price Consolidates Below $108,350

Bitcoin has been consolidating under a major resistance zone near $108,350 for the past week, a level that aligns with the value area high of the current trading range. Despite attempts to push higher, the price remains capped, indicating a potential exhaustion at this level. A bearish divergence is developing, where the Relative Strength Index (RSI) is making lower highs while the price pushes higher, suggesting that the recent rally is losing momentum. This divergence is particularly significant at key resistance levels, as it indicates that bulls are running out of steam and the rally may have been driven more by short-term momentum than sustained buying interest.

The rejection from $108,350 has formed a potential lower high, continuing a bearish structure that has been unfolding over the past several weeks. This level represents a significant barrier, with multiple rejections confirming it as a supply-heavy zone. Without a decisive breakout, the price is more likely to rotate within the established range. The bearish divergence, where the price pushes slightly higher while the RSI weakens, is a typical early warning of exhaustion. This divergence is especially significant when it occurs at key resistance, as it suggests bulls are running out of steam. It also signals that the recent rally may have been driven more by short-term momentum than sustained buying interest.

Volume has been steadily declining throughout this consolidation. In the context of technical resistance and divergence, this weakening volume reinforces the bearish bias. For a breakout to occur, strong volume would need to confirm a shift in demand. Without that, the price is more likely to roll over and test the next key support — the point of control and eventually the value area low at $100,960. As long as Bitcoin remains below $108,350, the bias leans bearish. A confirmed rejection backed by increasing sell volume could trigger a clean rotation down toward $100,960. If that level fails, further downside toward the previous swing low may unfold. Alternatively, a reclaim of $108,350 on strong volume would be the first bullish signal and could invalidate the current bearish setup.

Bitcoin's price action has recently exhibited signs of potential breakdown, as indicated by a bearish divergence on the weekly timeframe. This divergence suggests that while the price of Bitcoin may be moving higher, the momentum behind this movement is waning. This discrepancy between price and momentum can often signal a reversal in trend, with the potential for a bearish breakdown. The bearish divergence is evident in the Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements. The RSI has been forming lower highs, indicating that the upward momentum is fading despite the price continuing to rise. This divergence is a classic technical analysis signal that suggests the current uptrend may be losing steam and could potentially reverse.

The presence of this bearish divergence is further supported by other technical indicators. For instance, the price of Bitcoin has been trading below its December 2024 high, which is another bearish signal. Additionally, the formation of a falling wedge pattern on the price chart suggests that a breakdown below the support trendline could trigger a significant downward move. The bearish signals are not limited to the weekly timeframe. On the daily chart, Bitcoin's price action shows a strong V-reversal following a correction from a recent high of $110,789 to a low of $98,240. While this rebound may initially appear bullish, the underlying momentum indicators suggest that the potential for a breakout in the coming days is uncertain. The presence of a bearish divergence on the RSI, along with the formation of a falling wedge pattern, indicates that the price of Bitcoin may be facing rejection at current levels.

The technical analysis signals are not the only factors contributing to the bearish outlook. The overall market sentiment also plays a role in determining the direction of Bitcoin's price. The presence of bearish divergence on the RSI, along with the formation of a falling wedge pattern, suggests that the market sentiment is turning bearish. This shift in sentiment could further exacerbate the potential for a breakdown in Bitcoin's price. In conclusion, the bearish divergence on the weekly timeframe, along with other technical indicators, suggests that Bitcoin's price may be facing rejection at current levels. The potential for a breakdown in the coming days is high, and traders should be cautious when entering long positions. The overall market sentiment also supports this bearish outlook, with the presence of bearish divergence on the RSI and the formation of a falling wedge pattern indicating a shift in market sentiment.