- RSI divergence suggests MSTR/$MARA could break down soon.
- The ascending wedge points to a potential 30% price decline.
- Key support levels for MSTR/SMARA are under pressure.
Above the picture is the spread of MSTR along with $MARA, where the critical moment in the price movement is with an ascending wedge formation spanning about a year. Contrary to the usual expectation of such formations, which usually end with a rapid full-blown price breakdown, a lot of study is required to appreciate the dynamics within the chart, as one goes through each technical model pattern and indicator to forecast the probable future price movement.
The formation of an ascending wedge typically indicates that prices are rising within increasingly narrowing support and resistance levels, thus suggesting the possibility of future breakdown. The RSI (relative strength index) also reveals bearish divergence as it continues to decline even as the price MSTR/$MARA is increasing, which is also signaling ways for potential bearish reversal.
Key Technical Indicators: Ascending Wedge and RSI Divergence
Judging by the price action itself, the chart MSTR/$MARA shows that this high price has been pushing upward within an ascending wedge that is characterized by its tendency to break to the downside. More importantly, this chart represents price increases from low levels, which keeps this wedge shape over time. In this case, the price makes new highs again and again but with a more narrow range. If this bullish momentum does not materialize, this break may lead to a very sharp fall.
But on the other side, there is a signal by the RSI. The Relative Strength Index tends to show a regular bearish divergence, which implies increased prices, although less momentum supports this rose price movement. From February 2024 till now, the RSI has moved downward despite increased MSTR/$MARA prices; such conditions usually signal sharp moves downwards. The current reading of the RSI slightly above 25 is suggestive with oversold conditions and confirms not-so-strong market tenor as is indicated by price.
Understanding the Wedge and Possible Breakdown
The ascending wedge is formed when price movements are producing higher highs and higher lows between converging trendlines. This is slow to build up and often feels like a steady strength-sustaining motion. Then there is usually a breakdown when price does not break out; market sentiment turns negative. That is when buyers lose their momentum, and the reversal is quite strong.
Given the fact that the wedge has quite clearly been in place for some time now, the behavior of the RSI has been one of bearish divergence, and that strength seems to indicate that a major change in trend might soon be upon the market. This is exactly what we are witnessing by the building of the wedge right now, but it is also helpful to recognize key levels of support and resistance. The price has not convincingly breached the upper boundary resistance trendline, which adds weight to the bearish argument, and should price fall beyond the trendline, we could see the opening of an avalanche of sale pressure and further downward.
