Bitcoin's Bullish Divergence Signals Potential Price Surge

Bitcoin has been exhibiting a bullish divergence pattern, with its Relative Strength Index (RSI) rising while the price trends lower. This technical setup suggests a potential reversal based on historical behavior. The cryptocurrency is currently trading within a range of $103,832 to $105,218, indicating a period of consolidation and potential for a breakout. The current divergence resembles a similar structure observed in April, which preceded a notable price surge.

Bitcoin's price has been stabilizing near the $105,000 mark, forming a bullish divergence as it consolidates after a significant surge in May. The cryptocurrency has been trading within a narrow range between approximately $104,200 and $106,300, repeatedly bouncing off the $105,000 level. This tight range has led to the formation of a symmetrical triangle, a classic consolidation pattern that often precedes a breakout.

Technical indicators show a sharp divergence between Bitcoin's price action and the Relative Strength Index (RSI). While price action set lower highs in the previous weeks, the RSI line has been trending upwards. This technical setup, also referred to as bullish divergence, has on most instances resulted in price bounces or temporary rallies. The RSI currently stands at 49.09, below the 50-neutral mark, suggesting that while the asset remains out of overbought territory, relative strength is building. This trend was also evident in an earlier divergence spotted in April, which preceded a sharp upward movement. The current RSI behavior aligns with a similar setup, strengthening the case for bullish expectations. However, the MACD trading above the signal line showed positive momentum in the market.

Bitcoin’s price has remained largely confined between its immediate support of $103,832 and resistance of $105,218. This tight range reflects indecision in the market, yet also hints at consolidation. Importantly, the price has not broken below the recent support, indicating a degree of buying interest at lower levels. The 24-hour price action has registered low volatility, ranging in a narrow band. This subdued phase has the potential to trigger a directional move, especially with the divergence pattern and current positioning on the RSI chart. Traders are anxiously awaiting a breakout above resistance or breakdown below support to determine the direction of the trend.

Bitcoin has exhibited this bullish divergence previously when maintaining an important support level. A historical chart analysis in April shows a comparable state where price action declined yet RSI rose to a rally that followed. A similar chart construct has now been formed, which continues to confirm the possibility of the current technical indicators. Market participants seek to be cautious but on alert, observing these events for confirmation of a trend reversal. If the trend continues and the price breaks above resistance, short-term demand for a move higher could reappear. In the meantime, Bitcoin moves sideways, with traders using RSI momentum and support and resistance levels to influence short-term direction.

Fundamentally, Bitcoin's price movement is influenced by several factors. Exchange-Traded Fund (ETF) flows remain a core driver, with cumulative ETF assets exceeding $132 billion after a rebound in inflows following a $267 million outflow on June 2. Institutional interest is growing, with MicroStrategy continuing to buy and Bitwise highlighting younger investors embracing the "wholecoin" status. On-chain data also points to whale accumulation, further supporting the bullish sentiment.

Macro catalysts, including softer U.S. inflation, a weakening dollar, and dovish Federal Reserve hopes, are driving broader asset synergy. Bitcoin, along with gold and equities, is chasing record highs, benefiting from the favorable macroeconomic environment. The bull case scenario predicts a breakout above $106,000–$107,000, which could ignite a surge toward $110,000–$115,000, potentially reaching up to $120,000–$150,000 if ETF inflows and macro tailwinds persist. The base case scenario suggests sideways action in the $104,000–$107,000 range as the market digests flows and macro data. The risk case scenario involves rejection at $106,000, leading to a fall back to $102,000–$100,000, testing psychological support and the 100-day Exponential Moving Average (EMA) confluence.

This week is pivotal for Bitcoin's price movement. Holding above $105,000 and clearing the $106,000–$107,000 zone could unlock fresh highs. Traders should monitor volume on breakouts, track ETF flow updates, and watch macro signals like U.S. inflation and Federal Reserve commentary. A breakout could lead to new highs, while a breakdown could open the door to deeper corrections.