A comprehensive breakdown of Bitcoin's price action on the 4-hour chart — January 2026
$87,952.5 +0.24%
Real-time: $87,890 (CoinGecko) • 24h Volume: $9.87B • Timeframe: 4H
Figure 1: BTC/USDT 4H chart with technical analysis annotations showing support, resistance, trend lines, and market phases.
Introduction
Bitcoin has entered a significant correction phase after reaching a local peak of $97,932 in mid-January. The chart reveals a clear bearish structure that traders need to understand before making any decisions. In this analysis, we will walk through each phase of the recent price action, explain the key technical levels, and discuss what might come next.
Phase 1: The Rally (January 4–16)
The month began with Bitcoin in a strong uptrend. Starting from approximately $88,000, the price climbed steadily over 12 days, eventually reaching a peak of $97,932. This represented a gain of +11.3% — a solid rally by any measure.
During this phase, the price remained consistently above all three Moving Averages: the MA(7) shown in yellow, the MA(25) in pink, and the MA(99) in purple. When price trades above all MAs, it signals strong bullish momentum. Buyers were in control, and each dip was met with aggressive buying.
On the chart, I have labeled this as "① RALLY +11.3%" in green text on the left side.
Phase 2: The Top (January 16)
Every rally eventually meets resistance. For Bitcoin, that moment came at $97,932. The price attempted to break through the psychological $98,000 level but failed. Long wicks appeared on the candles — a telltale sign that sellers were stepping in aggressively at higher prices.
This is what traders call a "distribution phase." Smart money — institutional investors and experienced traders — began selling their positions to retail buyers who were chasing the rally. The peak formed what is now our R1 Resistance level, marked by the top red horizontal line on the chart.
I have marked this moment with a yellow "PEAK" arrow and labeled it as "② TOP".
Phase 3: The Selloff (January 16–21)
What followed was a sharp and painful correction. In just five days, Bitcoin dropped from $97,932 to a low of $86,021 — a decline of -12.2%. This is the kind of move that liquidates overleveraged traders and shakes out weak hands.
During the selloff, the price broke below the MA(7) first, then the MA(25), and eventually fell below the MA(99). Each breakdown accelerated the selling pressure. Volume spiked significantly during this phase, confirming that the move was driven by genuine selling rather than low-liquidity manipulation.
The magenta diagonal line on the chart represents the downtrend line, connecting the peak to the subsequent lower highs. This line now acts as dynamic resistance — any rally attempt will likely face selling pressure when it approaches this line.
This phase is labeled as "③ SELLOFF -12.2%" in red.
Phase 4: The Recovery Attempt (January 21–Present)
After hitting the low of $86,021, Bitcoin found buyers. The price has since bounced to the current level of around $87,952. But is this a genuine recovery, or just a "dead cat bounce"?
The evidence suggests caution. The price is still trading below all three Moving Averages. Volume has dropped significantly — the current volume is about 80% below the average. Low volume during a bounce typically indicates weak buying interest, which means the bounce could easily fail.
I have labeled this phase as "④ RECOVERY?" with a question mark to emphasize the uncertainty. The green "BOTTOM" arrow points to the $86,021 support level, which is now the most critical level to watch.
The Death Cross Warning
One of the most significant technical developments on this chart is the Death Cross. This occurs when a shorter-term Moving Average crosses below a longer-term Moving Average — in this case, the MA(7) has crossed below the MA(25).
On the chart, I have marked this with a red "X" symbol and the label "DEATH CROSS!". Historically, Death Crosses often precede extended downtrends. While not a guaranteed prediction, it is a warning sign that should not be ignored.
Currently, the Moving Averages are aligned bearishly: MA(7) at $88,115, MA(25) at $88,527, and MA(99) at $91,750 — all above the current price. For the trend to reverse, Bitcoin would need to reclaim these levels one by one.
Key Support and Resistance Levels
Resistance levels are prices where selling pressure is expected to emerge. On this chart, we have three main resistance levels:
R1 at $97,932 — This is the recent peak. Breaking above this level would signal a potential trend reversal and continuation of the bull market.
R2 at $91,750 — This corresponds to the MA(99), the long-term Moving Average. It represents the "line in the sand" between bull and bear territory.
R3 at $88,527 — This is the MA(25) level. Bitcoin needs to break above this to show any short-term strength.
Support levels are prices where buying pressure is expected to emerge:
S1 at $86,021 — This is the most critical support. It is the recent low and the level where buyers stepped in to stop the selloff. If this level breaks, expect accelerated selling.
S2 at $85,426 — The next support if S1 fails.
What Comes Next?
Based on the current technical setup, there are three possible scenarios:
Scenario 1: Continued Downtrend (55% probability) — If Bitcoin breaks below $86,021 with increasing volume, expect the downtrend to continue. The next targets would be $84,000 and potentially $82,000. Traders looking to short should wait for confirmation of the breakdown.
Scenario 2: Relief Rally (35% probability) — If Bitcoin can break above $88,500 (the MA25 level) with strong volume, we could see a relief rally toward $91,000–$93,000. This would not necessarily mean the downtrend is over, but it would provide a trading opportunity for nimble traders.
Scenario 3: Sideways Consolidation (10% probability) — The price could trade in a range between $86,000 and $89,000 for several days before making a decisive move. This would be a period of accumulation or distribution, depending on which way it eventually breaks.
Conclusion
The Bitcoin chart tells a clear story: after a strong rally to nearly $98,000, the market has entered a correction phase. The Death Cross, the downtrend line, and the bearish MA alignment all point to continued weakness in the short term.
However, the $86,000 support is holding — for now. This is the level that bulls must defend. A break below it would likely trigger another leg down, while holding above it keeps the possibility of a recovery alive.
For traders: patience is key. Wait for clear confirmation before entering positions. Either wait for a break below $86,000 to short, or wait for a break above $88,500 with volume to go long. Avoid the temptation to "catch the falling knife."
For long-term investors: this could be an accumulation opportunity, but use dollar-cost averaging rather than trying to time the exact bottom. The trend is still bearish, and there may be better prices ahead.
"The trend is your friend until it ends." In this case, the downtrend remains intact until proven otherwise.
Analysis Date: January 27, 2026
Real-Time Price: $87,890 (CoinGecko)
Chart: BTC/USDT Perpetual — Binance — 4H Timeframe
Disclaimer: This analysis is for educational purposes only and should not be considered financial advice. Cryptocurrency trading involves significant risk. Always do your own research and never invest more than you can afford to lose.
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