Bitcoin Weekly RSI Sets Record For Most Oversold In History

News BTC

Bitcoin price is in free fall and the cryptocurrency community is in panic. The high-risk, speculative asset class is living up to its notorious volatility and the selling appears unstoppable.

At some point, all assets become oversold and recovery begins. After the most recent selloff, BTCUSD weekly RSI has reached the most oversold level in the entire history of price action, including two bear market bottoms.

How To Get Free Crypto  

Bitcoin Selloff Sets Record For Most Oversold Weekly RSI Ever

Bitcoin price today tapped below $22,000 per coin and is rapidly approaching prices closer to the 2017 peak. Many altcoins, including Ethereum, have already pushed below the past bull market peak in an unprecedented move for the crypto market.

5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!

Panic is properly ensuing. The frantic attempt to cash out coins as fast as possible while there is still value left has prompted many top exchanges to halt withdrawals and better assess the situation. The selling pressure has also pushed the weekly Relative Strength Index to the most historically oversold level since Bitcoin started trading.

Related Reading | Bitcoin Drops To 18-Months Lows, Has The Market Seen The Worst Of It?

The Relative Strength Index is a commonly used momentum oscillator first developed by J. Welles Wilder Jr. in the 1970s. Wilder is also the creator of the Average True Range, Average Directional Index, and the Parabolic SAR. It is used to gauge when assets become overbought or oversold.

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?

Get 110 USDT Futures Bonus for FREE!

With BTCUSD historically oversold on weekly timeframes using the RSI, what exactly could this mean, and what might happen next?

Coinbase Banner  

BTCUSD weekly RSI is the most oversold ever | Source: BTCUSD on TradingView.com

Comparing The Current Crypto Collapse With Past Bear Market Bottoms

A visual inspection of the BTCUSD weekly chart instantly puts the RSI below the lower threshold of 30 at around the same level as two past bear market bottoms. Readings below the lower threshold of 30 are considered oversold. In contrast, readings over 70 are considered overbought.

More precise readings of the 2015 and 2018 bear market bottoms are 28.41 and 28.72, respectively. The current reading on BTCUSD is under 28, marking the lowest point ever on weekly timeframes.

Related Reading | Bitcoin Bear Market Comparison Says It Is Almost Time For Bull Season

Although this is a sign that in hindsight could pinpoint a significant bottom in crypto, because the RSI is momentum-based, downside could continue until the momentum has run its course. Price can also repeatedly test the area similar to how Bitcoin regularly displays readings of overbought price action throughout its history.

Buyers at these prices would want to look for an RSI swing rejection setup according Wilder’s methodology. Much like during past bear markets, the setup involves waiting for the RSI to reach oversold levels. The rest of the strategy involves watching for the RSI to return back above the threshold, and hold above the threshold during the next correction. After the RSI makes a higher high, a buy signal is generated.

FreeBitcoin Banner  

Taking a position now does not mean it is safe  | Source: BTCUSD on TradingView.com

Even then, bulls aren’t completely safe in their positions. If past bear markets are any indication of what to expect, there is a 50/50 chance of a double-bottom formation with a bullish RSI divergence.

In 2015, a second bear market bottom took place setting a slightly lower low after a full 200 days. The RSI made a higher low, signaling that the selling momentum was extremely weak relative to the movement of the price, and the most explosive bull run in history followed.

Was this the bottom sign that bulls were waiting for?

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

Go to Source
Author: Tony Spilotro


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.