bitcoin weekly RSI bottom

Why Weekly RSI Might Suggest Bitcoin Bottom Is In?

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Bitcoin price is currently trading around $23,500 at the time of writing, up more than 30% from lows and 10% for the week. The recovery has pushed the weekly RSI out of oversold territory after hitting historic levels.

This is why the setup could be the buy signal bulls have been waiting for, and how the Relative Strength Index is currently looking like the latest bear market bottom.

Weekly Bitcoin RSI Recovers From Historic Oversold Conditions

In technical analysis, sometimes less is more. Traders usually fill a chart with lines or indicators, desperate for an edge in the market. While in reality that lead is patience and looking out for the right signals to buy and sell Bitcoin.

Related literature | Bitcoin Weekly RSI Sets Record for Most Oversold in History, What Comes Next?

According to the weekly Relative Strength Index, the time to buy BTC may be near. Comparisons to past bear markets suggest the signal could signal a long-term bottom.

Bitcoin weekly RSI has recovered from oversold conditions | Source: BTCUSD on TradingView.com

The weekly RSI has risen above 30 from oversold conditions. This alone is enough for technical analysts to start looking at follow-through.

A buy signal on the RSI is generated after the indicator hits the lower threshold at 30, moves back, holds and then pushes past the initial high. The signal is clear during the 2018 bear market telling the masses that it was time to buy BTC.

BTCUSD_2022-07-19_15-19-34

An example of an RSI buy signal at the 2018 bear market bottom | Source: BTCUSD on TradingView.com

Why the bottom of the bear market is already behind us

The Relative Strength Index on TradingView contains a moving average which defaults to a length of 14. Bitcoin price action recovering the moving average after recovering from oversold conditions has historically caused significant long-term bottoming.

BTCUSD_2022-07-19_15-21-19

The weekly RSI reached the most oversold conditions ever | Source: BTCUSD on TradingView.com

The chart above also shows that the recent low in the weekly RSI was the most oversold cryptocurrency in history.

Related literature | Bitcoin Monthly Tags Lower Bollinger Band, the creator of the tool hints at the bottom

In the past, Bitcoin has always recovered to new record highs. However, speculative assets may remain overbought or oversold for longer than expected. What happens next in the event of this most recent record low on the RSI? Was this the bottom in crypto?

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Featured image from iStockPhoto, Charts from TradingView.com