Bitcoin (BTCUSD) Set a New Record High Ahead of Donald Trump's Inauguration Monday

Bitcoin (BTCUSD) set a new record high ahead of Donald Trump's inauguration Monday but pared those gains as the new U.S. president, who has been a vocal supporter of the cryptocurrency market, made no mention of it during his inaugural address or other appearances after taking office.

Bitcoin (BTCUSD) set a new record high ahead of Donald Trump’s inauguration Monday but pared those gains as the new U.S. president, who has been a vocal 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 early-November election amid optimism that the Trump administration could reduce regulatory roadblocks, establish a bitcoin reserve and pursue other initiatives that promote the widespread adoption of digital assets.

After moving as high as $109,300 in the early-morning hours Monday, bitcoin was trading at $102,800 recently.

Bearish Candlestick Patterns Signal Caution

After climbing today to the all-time high, the price of bitcoin retreated to form a shooting star, a candlestick pattern that warns of a potential reversal. What's more, the shooting star followed a bearish engulfing pattern over the weekend, another candlestick pattern that warns of a move lower.

In further signs of waning price momentum, as today's peak made a higher high, the relative strength index (RSI) made a relatively shallower high to create a bearish divergence between the price and indicator, indicating a possible double top.

Let’s identify three key levels where Bitcoin could attract support during a retracement, but also look at important overhead areas that may come into play if the cryptocurrency’s price continues to move higher.

Key Support Levels to Watch

The first key lower level to watch sits around $92,000. This area could encounter support near the early-November peak that closely aligns with several pullback troughs that formed on the chart between late November and early January.

A close below this level may see a move down to the $87,000 level, a location on the chart where investors could look for buying opportunities near the bottom of a pennant pattern that preceded the cryptocurrency’s move higher in the first half of December.

Bitcoin bulls’ failure to defend this level opens the door for a more significant drop to around $74,000. Investors who favor buy-and-håll strategies may seek entry points in this region near a multi-month horizontal line that links the March and October 2024 peaks with the nearby rising 200-day moving average.

Important Overhead Areas to Monitor

If Bitcoin moves higher from here, investors should keep a close eye on the $106,000 area. The cryptocurrency has struggled to stage a decisive close above this number since posting its record closing high in mid-December.

Finally, it’s worth monitoring the $120,000 area. This location may find overhead selling pressure near a measured move price target that calculates the depth of the cryptocurrency’s recent rangebound trading activity and adds that amount to the breakout point. For example, we add $14,000 to $106,000, which projects a target of $120k.

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As of the date this article was written, the author does not own any of the above securities.