![\"Chart\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202301\/20230112-jmu-01_kjq578.png\")
<\/div>\nThis is a daily timeframe chart of bitcoin. You’ll find three important features…<\/p>\n
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An unfolding falling wedge<\/strong> (blue lines).<\/p>\n
Falling wedges are typically reversal patterns. The trendlines of the pattern funnel prices to the point where the trendlines would cross one another. This point is known as the apex<\/em>.<\/p>\n
The closer prices get to the apex, the greater the odds of a bullish pop higher. A strong break out of the upper trendline of the pattern is a sign the falling wedge is complete.<\/p>\n<\/li>\n
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A bullish divergence<\/strong> (red line) in the Relative Strength Index (RSI).<\/p>\n
As a market nears a top or bottom, the RSI will typically start diverging from the market’s price action.<\/p>\n
Although prices have steadily declined since November 2021, the RSI registered its most extreme reading in the middle of June 2022.<\/p>\n
Since then, the RSI hasn’t been able to make a lower low and has even started to trend higher. This kind of reading in the RSI is often a leading indicator.<\/p>\n
Meaning, you’ll see divergence appear on a price chart before the market puts in a bottom and reverses.<\/p>\n<\/li>\n
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The 200-day moving average<\/strong> (MA – green line).<\/p>\n
If bitcoin can break out of its falling wedge, then the 200-day MA would make for an excellent upside target.<\/p>\n
As of writing, this MA comes in at around $24,310. If bitcoin can break above the 200-day MA, then that opens the door to the possibility of a longer and larger lasting recovery.<\/p>\n<\/li>\n<\/ol>\n
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