bitcoin price is currently trading around $23,500 at the time of this writing, up more than 30% from the lows and up 10% for the week. The rally pushed the weekly RSI out of oversold territory after hitting historic highs.
Here’s why the setup could be the buy signal the bulls have been waiting for and how the Relative Strength Index is currently looking at the latest low in the bear market.
Bitcoin Weekly RSI Recovers From Historic Oversold Conditions
In technical analysis, sometimes less is more. Traders typically fill a chart with lines or indicators, desperate for a market edge. While in reality, this advantage is patience and finding the right signals to buy and sell Bitcoin.
Related Reading | Bitcoin Weekly RSI sets record for biggest selloff in history, so what?
According to the weekly relative strength index, the time to buy BTC could be close. Comparisons to past bear markets suggest that the signal may be hitting a long-term low.
Bitcoin weekly RSI has recovered from oversold conditions | Source: BTCUSD on TradingView.com
The weekly ROI moved from oversold conditions to a reading above 30. That alone is enough for technical analysts to start watching the follow-up.
A buy signal on the RSI is generated after the indicator recovers the lower threshold at 30, returns, holds, then breaks above the first peak. The signal was clear during the bear market low of 2018 and told the masses it was time to buy BTC.
An example of an RSI buy signal at the 2018 bear market bottom | Source: BTCUSD on TradingView.com
Why the bear market bottom may already be behind us
The relative strength index on TradingView includes a default moving average set to a length of 14. Bitcoin price action recovering the moving average after recovering from oversold conditions has in the past put a significant long term low.
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 the most sold the best cryptocurrency ever achieved historically.
Related Reading | Bitcoin Monthly Tags Lower Bollinger Band, Tool Creator Gives Hints at Bottom
In the past, Bitcoin has always recovered new highs. However, speculative assets may remain overbought or oversold for longer than expected. What happens next in the case of this most recent record low on the RSI? Was this the crypto bottom?
Weekly #Bitcoins The RSI analysis might suggest a bottom. What do you think ? pic.twitter.com/JSdUlbCo3j
— 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