The bitcoin chart indicator assumes that the worst period of bitcoin may be left behind as people with experience seem to buy the fall, as the key bitcoin price indicator believes that the bitcoin rollback is over.
Bitcoin’s bull market correction may be coming to an end, according to the relative strength index (RSI) – a technical indicator widely used to gauge momentum and identify overbought and oversold conditions.
The 14-week RSI has now dropped to 53.00, a level that has consistently acted as solid support and marked an end of corrective pullbacks during the 2016-2017 bull run.
The RSI support has come into play as bitcoin charted a 35% drop from $64,801 to $42,000 in the past four weeks. While Twitter comments from Tesla CEO Elon Musk look to have scared some retail investors into selling, there were already signs of exhaustion in the market. Whales had started moving money out of bitcoin, leaving less-wealthy investors struggling to do the heavy lifting above $60,000.
However, the bull market looks intact, with the cryptocurrency still up 365% year on year and evidence of long-term investors buying the dip. Coupled with the weekly RSI hovering at historically strong support, that suggests the cryptocurrency may soon resume its uptrend.
Bitcoin is showing signs of life at press time, trading 4% higher on the day at $45,300, according to CoinDesk 20 data.
The make-or-break level was finally breached in January 2018, marking bitcoin’s entry into a bear market. What followed was almost a year-long sell-off to as low as $3,200.
Since then, crossovers above and below 53.00 have served as reliable indicators of bullish/bearish trend changes. The RSI moved above 53.00 in April 2019 and April 2020, kicking off major price rallies. Meanwhile, drops below the level in September 2019 and February 2020 brought significant losses.
While the weekly RSI is currently hovering at strong support, the daily RSI is signaling oversold conditions with a below-30 print, writes Coindesk.
“From a technical point of view, the price is finding some support from the 200-day exponential moving average, plus other momentum indicators such as the RSI, which shows that the price is somewhat oversold,” said Simon Peters, cryptoasset analyst at multi-asset investment platform eToro.
“This means there is a possibility of buyers now stepping in to push prices up and, as we have seen before, investors waiting on the side lines are already using the sell-off we have seen to invest in cryptoassets, taking advantage of the volatility,” Peters added.
Therefore, Bitcoin has risen in price by $ 3 thousand per day. On the morning of May 18, the cost of the first cryptocurrency again exceeded $ 45.5 thousand. The asset is recovering after yesterday its price dropped to a three-month low.