Bitcoin just formed a textbook bullish divergence that has traders checking their leverage limits to make sure they don’t lose their shirts if short.

Rekt Capital, one of CT's most-followed analysts, spotted the pattern that previously kicked off rallies in August 2024, August 2023, and November 2022.

With BTC sitting at $84,789, this could be the setup that finally ends months of downtrend pain and sends bears back into hibernation.

The Divergence Play

The RSI is forming higher lows while Bitcoin's price keeps making lower lows – the kind of divergence that gets technical analysts excited.

This exact setup has historically been Bitcoin's favorite way to signal "the bottom is in" before vertical moves that liquidate shorts faster than an end-of-summer sale at your local mall.

For the non-chart nerds: when price goes down but momentum indicators go up, it's like watching a sprinter crouch before the starter pistol.

Even the most hardened bears are starting to sweat as their short positions look increasingly precarious.

Breaking the Downtrend

Bitcoin's been capped by a nasty downtrend line since January 2025, turning the $82,000-$83,500 zone into a brick wall for bulls.

Now, BTC is taking another swing at that resistance with more momentum than previous attempts – like a battering ram with fresh troops behind it.

The $78,508 support level has held stronger than a maximalist's conviction during a 70% drawdown.

If Bitcoin can maintain a position above $82,000 while cracking that trendline resistance, bears might want to rethink their portfolios.

The Wedge That Gives Edge

Bitcoin's forming a falling wedge pattern clearer than the "buy Bitcoin" signals in most mainstream financial crises.

This pattern shows selling pressure getting exhausted – like bears running out of ammo after months of suppressing price.

The Binance Taker Buy/Sell Ratio just hit 1.79, meaning buyers are more aggressive than usual and are roaring to take Bitcoin back to new all-time highs..

Smart money is positioning while retail is still arguing about whether the bear market is over on Reddit.

The Numbers To Watch

If this breakout confirms, expect Bitcoin to make a beeline for $87,250 – the 200-day simple moving average that acts like a magnet during trend reversals.

Beyond that, $94,100 becomes the next target, potentially arriving faster than most traders can update their positions – when Bitcoin breaks up like this, it tends to do it fast.

Fail to hold $82,000, though, and we're back to retesting $78,000-$79,000 – turning this whole setup into another bull trap that takes us right back to the drawing board.

These next few days are critical – either the beginning of something beautiful or another fakeout in a market that specializes in crushed dreams.

The Trump Bump

Bitcoin's brewing reversal isn't happening for no reason – Trump's 90-day tariff pause announcement just gave risk assets the green light.

The market is suddenly more optimistic than a new crypto-founder with a fresh venture capital check.

Meanwhile, institutions keep accumulating Bitcoin faster than Michael Saylor when Bitcoin hits… well, any price level, really – it’s Michael Saylor we’re talking about. 

On-chain metrics show that long-term holders are increasing positions rather than taking profits – always a bullish sign for Bitcoin's medium-term outlook.

Up, Up, And Away?

Bitcoin's technical setup is more bullish than we've seen in months, with multiple indicators aligning like planets before a cosmic event.

The RSI divergence, falling wedge, and strong buying activity are creating the perfect storm for a trend reversal.

If BTC can convincingly break above $83,500, the path to $87K and beyond looks clearer than the benefits of having bought Bitcoin in 2013.

However, remember that nothing moves in a straight line in crypto, and the market has a nasty habit of punishing the over-confident right when consensus seems unshakeable.