Bitcoin price continues to push greater, leaving only a few pullback alternatives to this point for those who failed to purchase beneath $20,000.
Price motion on BTCUSD the weekly timeframe, based on the Relative Strength Index, has reached a essential line that separates bear market from bull market. Any greater, and crypto might expertise a full blown breakout. Let’s have a look.
What The Relative Strength Tells Us About Cryptocurrencies
The Relative Strength Index is a well-liked technical indicator utilized in cryptocurrencies, initially created by J. Welles Wilder within the Nineteen Seventies.
The instrument measures momentum via the “velocity and magnitude of price movements,” based on Wikipedia. Readings above 70 can point out overbought situations, and falling beneath 30 suggests an oversold market.
In uncommon situations, the RSI will stay overheated depicting an especially powerful trend. Most of the time it stays someplace between 30 and 70 whereas costs consolidate or transfer sideways.
On greater timeframes, shifting previous the middle-zone on the RSI can ship decrease timeframes via the roof — or via the ground.
In the case of BTCUSD weekly charts, the RSI suggests this actual line within the sand is at present separating what could possibly be a full breakout right into a bull market – or a harsh rejection.
Breaching this degree on the RSI led to bullish rallies | BTCUSD on TradingView.com
Bitcoin Reaches Critical Line In The Sand Between Bear & Bull Market
Looking again all through the historical past of Bitcoin, pushing above roughly 55-56 on the RSI has up to now led to terribly bullish strikes. Falling beneath it result in the the deadliest declines and bear markets.
Even worse, as BTCUSD weekly finds itself on the key set off degree, rejection has resulted in some brutal strikes. In 2014 a rejection from there kicked off the second section of the bear market. In 2015, a bull market try was harshly rejected again to bear market lows.
The newest occasion in 2020 a bull market was rejected and mixed with the onset of COVID, resulted within the Black Thursday collapse. Considering the significance of the extent and the very fact a few of the worst rejections ever have taken place when the RSI reached such a studying, it’s no shock traders stay skeptical and cautious.
If Bitcoin could make it above the present zone on the Relative Strength Index, the bull market could possibly be again on in a flash. Currently, BTCUSD each day charts present a wildly elevated RSI, properly into overbought situations. However, prolonged phases of each day RSI ranges support bull market behavior, and will point out that the weekly RSI and additional greater timeframes may also method overbought ranges sooner or later sooner or later.
Beware of shorting #Bitcoin when the RSI is that this elevated. pic.twitter.com/YHus8lR6dG
— Tony “The Bull” (@tonythebullBTC) January 17, 2023
