Key takeaways
- Bitcoin hit a record high above $109,000 ahead of Donald Trump’s inauguration on Monday, but pared its gains as the new US president made no mention of the cryptocurrency during his inaugural speech or other appearances after taking office.
- Over the weekend, two bearish candlestick patterns formed on the cryptocurrency’s chart, warning of a potential downward move.
- Investors should watch for key support levels on Bitcoin’s chart around $92,000, $87,000, and $74,000, while also monitoring important overhead areas near $106,000 and $120,000.
Bitcoin (BTCUSD) set a new record ahead of Donald Trump’s inauguration on Monday, but pared those gains as the new US president, who has been a strong supporter of the cryptocurrency market, made no mention of it during his inaugural address or other appearances after taking office.
Bitcoin has gained nearly 50% since the election in early November, amid optimism that the Trump administration will reduce regulatory hurdles, establish a Bitcoin reserve and pursue other initiatives driving widespread adoption of digital assets.
After hitting $109,300 on Monday morning, bitcoin was recently trading at $102,800.
Bearish Candlestick Patterns Signal Caution
After hitting an all-time high today, the price of bitcoin has pulled back to form a shooting star, a candlestick shape that warns of a potential reversal. Additionally, Shooting Star followed an engulfing downtrend over the weekend, another candlestick pattern that warns of a downward move.
In another sign of slowing price momentum, while today’s high made a higher high, the Relative Strength Index (RSI) made a relatively shallower high to create a bearish divergence between the price and the indicator, indicating a possible double top.
Let’s identify three key levels where Bitcoin could attract support during a retracement, but also look at areas of significant overhead that may come into play if the cryptocurrency’s price continues to rise.
Key Support Levels to Watch
The first key lower level to watch is around $92,000. This area may encounter support near the early November peak that closely aligns with several pullback lows that formed on the chart between late November and early January.
A close below this level could lead to a decline to the $87,000 level, a spot on the chart where investors could look for buying opportunities near the bottom of a pennant pattern that preceded the rise in cryptocurrency in the first half of December.
The inability of Bitcoin bulls to defend this level opens the door for a more significant decline to around $74,000. Investors who favor buy-and-hold strategies could look for entry points in this region near a multi-month horizontal line that connects the March and October 2024 highs to the ascending 200-day moving average.
Important air areas to monitor
If Bitcoin rises from here, investors should keep a close eye on the $106,000 area. The cryptocurrency has struggled to close decisively above this figure since reaching its all-time high closing in mid-December.
Finally, it is worth keeping an eye on the $120,000 area. This location can detect overhead selling pressure near a measured moving price target that calculates the depth of the cryptocurrency’s recent trading activity and adds that amount to the breakout point. For example, we add $14,000 to $106,000, which projects a goal of $120,000.
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