Bitcoin News Today: Bitcoin's Overbought Momentum Faces Sell Signals Amid ETF-Driven Optimism

Bitcoin's daily chart has triggered caution among traders and analysts, with technical indicators such as the TD Sequential and Relative Strength Index (RSI) signaling potential short-term corrections. These signals align with historical patterns where similar metrics preceded significant price retracements, raising questions about the sustainability of Bitcoin's recent gains.

The TD Sequential indicator, a technical analysis tool used to identify potential trend exhaustion, has generated sell signals on Bitcoin's hourly and daily charts. Analyst Ali Martinez noted that such signals have historically coincided with pullbacks, including a 7% decline following a TD Sequential sell on July 14 and a 13% drop after the August 13 signal. Bitcoin currently trades near $121,000, a level where the RSI has reached 74.21, indicating overbought conditions. The Chande Momentum Oscillator (CMO) also peaked at 100, reinforcing concerns about exhausted bullish momentum.

Past corrections following TD Sequential sell signals suggest a potential near-term consolidation phase. For instance, a TD Sequential sell at $96,000 in mid-May coincided with a reversal to $94,800. Meanwhile, the RSI's overbought status-last seen at similar levels in July when Bitcoin traded above $123,000-has historically signaled short-term reversals. Market psychology further complicates the outlook: Trader KillaXBT highlighted that Bitcoin's current position mirrors inverted bear-market structures, where selling feels counterintuitive despite the risk of a retracement.

Bitcoin's immediate support levels are critical for its near-term direction. A breakdown below $121,000 could test the $115,500 (20-day moving average) and $108,600 support zones. Conversely, a rebound above $124,362 might extend the uptrend, though sustained volume activity remains moderate at $1.32 billion on Binance. ETF inflows, however, remain bullish: US spot Bitcoin ETFs have drawn $1.6 billion in net inflows over three days, with BlackRock's IBIT entering the top 20 largest ETFs by assets.

While the RSI and TD Sequential suggest caution, other metrics remain bullish. The MACD histogram remains positive at 1,245.1158, indicating persistent upward momentum. Traders are advised to monitor key resistance at $124,362 and support at $115,500. Short-term strategies could include taking profits near resistance or waiting for a pullback to $115,000–$117,000 for long entries. A decisive close below the 50-day moving average at $113,839.61 would invalidate the bullish case.

Bitcoin's technical profile reflects a market at an inflection point, balancing strong underlying trends with overextended momentum. Analysts emphasize that while the overall bullish structure remains intact, traders should brace for near-term volatility. The interplay between technical exhaustion and ETF-driven demand will likely dictate whether the current consolidation phase leads to a deeper correction or a resumption of the uptrend.

Source: [1] Coinedition (https://coinedition.com/bitcoin-xrp-sol-and-ada-face-pullback-as-td-sequential-flashes-sell-signals/)

[2] The Daily Hodl (https://dailyhodl.com/2025/10/07/crypto-trader-issues-bitcoin-and-ethereum-warnings-updates-outlook-on-layer-1-blockchains-sui-and-sei/)

[3] NewsBTC (https://www.tradingview.com/news/newsbtc:26f2a682c094b:0-bitcoin-surges-past-71-000-but-td-sequential-says-sell/)

[4] Cointelegraph (https://cointelegraph.com/news/bitcoin-hits-119-5k-but-rsi-warns-btc-price-pullback-next)

[5] Blockchain.News (https://blockchain.news/news/20251005-btc-tests-overbought-territory-at-123810-as-rsi-signals-caution)

[6] Benzinga (https://www.benzinga.com/crypto/cryptocurrency/25/10/48132694/bitcoin-daily-chart-shows-warning-signs-analyst-says-should-you-worry)