Bitcoin Painted Eight Negative Weeks, But It Could Be Market Rescuer
As traders panic after eight negative weeks in the market, this could be an important reversal sign
Bitcoin’s performance in May puts it first cryptocurrency in conditions the market has not seen before as it has painted eight consecutive negative weeks. But while some investors are manically dropping their holdings, others believe Bitcoin is slowly becoming oversold and may soon reach a retracement.
Never seen before
Eight consecutive weeks of losses on Bitcoin is something traders and investors have not seen before, but according to the BTC chart, it is the result of a massive rally that started on Bitcoin in November 2020.
Source: Trading Display
Back on the ATH, Bitcoin has shown nearly 300% of YTD gains, trading at close to $70,000. The run between 2020 and 2021 was the longest bull run the first cryptocurrency saw in its trading history. The 2020-2021 rally was almost twice as long as the run we saw in 2017.
Daily and intraday timeframes already suggest Bitcoin has entered the oversold zone as it has been under heavy selling pressure since the beginning of the year, but on the weekly chart, BTC is barely oversold after being heavily overbought in November.
While the number of consecutive weekly candles can be considered an oversold/overbought indicator, the main way to determine the state of the market is the Relative Strength Index.
According to the technical indicator, the RSI barely moves below the value of 35, making the analyzed asset barely oversold and may not be an indication of an immediate reversal.
The closest support line for Bitcoin is the 200-week moving average, located at around $27,000. At the time of going to press, Bitcoin is testing the $29,000 support and, in the event of a breakout, could move directly to the aforementioned support.