Bitcoin Holds Above Yearly Pivot, Bullish Divergence Signals Potential Reversal

Bitcoin (BTC) is currently at a pivotal point, maintaining its position above the yearly pivot level. In a recent market analysis, experienced crypto trader Josh Olszewicz highlighted several key technical factors that could influence Bitcoin’s next move. These factors include RSI divergences, volume trends, and candlestick formations, all of which are crucial for understanding the market's direction.

Over the past few weeks, Bitcoin has faced significant downward pressure. Olszewicz's analysis focused on determining whether the market has reached a point of exhaustion for sellers or if further declines are likely. A critical observation in his analysis is the presence of bullish divergence on both RSI and volume, a pattern that historically indicates a potential trend reversal. Olszewicz noted that Bitcoin is currently holding at the yearly pivot and the original pitchfork, with a bullish divergence on both RSI and volume. This setup is similar to conditions observed in August and September, where Bitcoin saw relatively equal lows in price, but RSI formed significantly higher lows. While this does not guarantee an immediate reversal, it increases the likelihood of an upside move, especially if further confirmations arise.

From a candlestick perspective, Bitcoin’s price action shows early signs of potential stabilization. Olszewicz emphasized the significance of Dragonfly Doji formations, particularly when combined with bullish engulfing candles, which often signal seller exhaustion and trend reversals. He stated, “What I would love to see on many of these charts is what we’re already seeing on the daily—a green Dragonfly candlestick. It’s a small body with a long wick, showing clear rejection of lower prices. If confirmed, this could be an early bottoming signal.” However, he cautioned that while these patterns can indicate a shift in market sentiment, they are not foolproof and require additional confirmation from price structure and momentum indicators.

Olszewicz also mentioned the possibility of an inverse Head and Shoulder pattern forming, which could align with a potential kumo breakout in the second quarter and measures to an all-time high retest. He advised traders to remain disciplined and avoid over-leveraging positions in volatile conditions. He stressed the importance of maintaining a consistent trade sizing strategy and avoiding emotional decision-making. “You don’t have to make it all back in one trade. You don’t have to revenge trade. Confidence drops in times of chaos, and that’s when most people make mistakes.” He also warned against blindly dollar-cost averaging into assets simply because they appear heavily discounted, emphasizing the importance of risk management.

While the broader macroeconomic landscape remains uncertain, Bitcoin’s technical positioning suggests that a potential relief rally could emerge in the coming months. Olszewicz suggested that March and April could be pivotal periods for Bitcoin, where a clearer trend could develop. However, he reiterated that for now, traders should focus on high-probability setups rather than speculative plays. “If BTC can stabilize here and reclaim key levels, the case for a stronger recovery into Q2 strengthens. But it’s too early to make that call. Right now, the best strategy may simply be to wait for high-confidence setups.”