This is a technical analysis article written by CoinDesk Analyst and Certified Market Technician Omkar Godbole.
Bitcoin The three-week price rebound appears vulnerable to a reversal as the Nasdaq, Wall Street’s technology index, hit a wall last week, hinting at potential trouble ahead.
Since hitting a low of $80,000 on November 21, BTC has steadily bounced above $90,000, creating lows and highs in a counter-trend ascending channel within a broader downtrend.
The rally appears to have some weight, as the dollar index fell after the Fed’s rate cut on Wednesday, and a longer-term trend indicator hinted at a potential bullish shift in BTC momentum.
Yet these measures have failed to trigger a lasting recovery. Instead, BTC rose from $93,000 on Friday to nearly $88,000 on Sunday before settling around $89,600 at press time.
BTC ended last week with a bearish candle including a long upper wick, indicating rejection above $94,000 and a small red body with a negligible lower wick. This classic rejection pattern signals a fading of bullish momentum and a dominance of “selling the rallies” at the highs.
This trend, alongside the Nasdaq’s stalled rebound from the November lows, raises fears of a bigger drop in BTC towards $80,000.
The Nasdaq fell nearly 2% last week, forming a bearish engulfing candle that reversed the previous week’s gain. Paired with a bearish MACD on the weekly timeframe, this signals potential downside volatility that could spill over into BTC, given their strong positive correlation, especially pronounced during NDX downtrends when BTC often amplifies the blow, as Wintermute recently noted.
Another red flag for risk asset bulls is the MOVE Index, which measures the 30-day implied volatility of U.S. Treasuries.
The MOVE index showed an inverted hammer candle last week. This candlestick pattern, appearing after a prolonged downtrend as in the case of MOVE, is considered an early sign of a bullish recovery.
In other words, the MOVE index could rise as a sign of increased volatility in Treasuries, which tends to cause financial tightening globally and cap gains in risky assets. Historically, BTC has tended to move in the opposite direction to the MOVE index.
Key levels
All things considered, BTC appears more likely to break out of the counter-trend channel than to move higher, opening the door to a retest of the recent $80,000 lows.
On the positive side, a clearout between $94,000 and $95,000 is needed to regain a near-term uptrend, although strong resistance is expected between $96,000 and $100,000, including the 50-day SMA and the Ichimoku cloud.
