For the first time in almost four years, BTC which is a key long term bitcoin price indicator has reported oversold conditions.
The Relative Strength Index (RSI) which is the widely followed index of 14 weeks that oscillates between zero to hundred is currently at the position of 29.80. This level was last seen in January of 2015.
If the RSI is below 30.00, then an asset or a crypto-currency is taken to be oversold. Whereas a reading above 70.00 on the Relative Strength Index indicative of overbought conditions of the asset or crypto-market.
The reading below 30.00 on the 14 week RSI is indicative of the fact that the recent selling from the highs which are above $6,200 might reach to a point where it gets exhausted.
Because of this there can be a defending of the immediate supports at $3,179 from the BTC. This is also the moving average of 200 week in the short run.
According to many experts, the below 30 drop of the RSI is often followed by a strong corrective bounce.
However, according to CoinDesk, that is not true necessarily, because some markets at times enter into trends that are very strong and in that situation, the RSI can remain at the state of “oversold” or “overbought” for prolonged periods of time.
CoinDesk, further stated, that the bear market of BTC which is on-going is looking pretty resilient because now the sell-offs are supported by very strong volumes.
Therefore, despite the oversold readings on the fourteen week RSI, a bounce which is strong enough could remain elusive for some time.
On Bitstamp, BTC is trading at $3,390. This represents a 2.3 percent fall on 24 hour basis.
As long as BTC is trading blow the descending trend line, on the daily chart, the immediate outlook will continue to remain bearish.
Source: CoinDesk, XBT Money
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