Bitcoin’s RSI Hits Two-Year Low, Here’s Why It Might Be Good For The Market

Arman Shirinyan

Indicator that predicted a reversal leading to ATH run now shares another reversal sign


Why this could be the first sign of a turnaround?Can the indicator predict a complete turnaround?

One of the most popular technical indicators in market analysis – the Relative Strength Index – has fallen extremely low values previously observed in March 2020, which were triggered by the global financial crisis.

Why this could be the first sign of a turnaround?

The Relative Strength Index is often used to determine current market conditions and to indicate turning points once the price reaches oversold or overbought.

Source: Trading Display

The indicator is also used to find differences with the price chart and then determine if the trend on the asset is reversing.

But while divergences can be thought of as an additional way to use the indicator, looking for oversold and overbought levels is the main way to use the Relative Strength Index.

Can the indicator predict a complete turnaround?

While the RSI may give us a hint as to its upcoming move in the future, it is not a panacea against the bear trend as its signals are usually considered to be short term. Almost any reversal signal based on RSI will remain active until the values ​​of the indicator enter the “neutral” zone.

During the last drop below the value of 25 on the indicator in March 2020, Bitcoin bounced back almost immediately, reaching a local high of $10,000. But while the indicator “predicted” a near-term reversal, the data it provided did not suggest that the cryptocurrency would jump to the new ATH in the next few months.

At the time of writing, Bitcoin is trading at $35,865 after another unexpected drop that occurred during the asset’s correction that began in November when digital gold traded at nearly $70,000.

Leave a Reply

Your email address will not be published.