bitcoin price is attempting its first major rally since dropping below $20,000 per BTC during the recent crypto market contagion. A hidden bullish divergence could indicate that although the selling has been extreme, the bulls have been waiting and will soon start charging.
Here is a closer look at the potential bullish continuation signal on the BTCUSD weekly price charts.
Crypto Bulls Awaits, May Be Ready To Load Soon
Bitcoin became a household name in late 2017 after hitting nearly $20,000 per coin and sending the entire crypto market into a historic bull run. After a long bear market, prices were expected to appreciate significantly.
The now infamous stock-flow model predicted that the top cryptocurrency had reached well over $100,000 per BTC to date. Yet instead, prices have returned to 2017 levels. Many altcoins have corrected to 2013 prices.
Related Reading | How the Weekly RSI Could Suggest Bitcoin’s Bottom is in Place
Although the sell-off took over 74% off the price of Bitcoin, the patient bulls may have been waiting and planning their next move. A hidden bullish divergence on BTCUSD weekly ROI formed from the Black Thursday low that took the major cryptocurrency below $4,000 per coin.
The dip then acted as a spring driving the 2020 bull run and new all-time highs throughout 2021. With a potential continuation signal on the weekly RSI, is Bitcoin ready to pick up where it left off? ?
The weekly RSI reached the most oversold conditions ever | Source: BTCUSD on TradingView.com
Does this hidden Bitcoin RSI bullish divergence signal a “continuation?” »
The weekly relative strength index presents a potential hidden bullish divergence. In the example above, this demonstrates that an indicator is making a lower low, while the price action is making a higher low. This type of behavior usually indicates the continuation of the primary trend – which for Bitcoin has almost always been up.
The same weekly RSI also reached the most oversold conditions in the short history of cryptocurrency prices. Even better for bulls, the RSI broke out of oversold territory and above a reading of 30. The chart above also shows that the RSI is potentially breaking above the RSI-based moving average.
Related Reading | Bitcoin Weekly RSI sets record for biggest selloff in history, so what?
If Bitcoin is to continue its bull run and pick up where it left off, the first major zone to recover is $29,000. If BTCUSD can re-enter the multi-year trading range, bulls could pull the other side of the range near 2021 all-time highs.
But it all hinges on confirmation of this bullish divergence, which we will only really know in hindsight.
— Tony “The Bull” Spilotro (@tonyspilotroBTC) July 19, 2022
Follow @TonySpilotroBTC on Twitter or join TonyTradesBTC Telegram for exclusive daily market insights and technical analysis training. Note: Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com