$5K Bounce? Bitcoin Price May Have Hit Bottom For Now

Bitcoin (BTC) could be in for a stronger recovery rally in the next few days, having found a temporary bottom near $ 4,000.

The leading cryptocurrency, which hit a 14-month low of $ 4,048 on Bitstamp yesterday, is now trading at $ 4,580, representing a 2 percent gain on a 24-hour basis.

The $ 500 recovery seen yesterday indicates that the market is finally paying heed to the record oversold levels reported by the 14-day relative strength index (RSI). Currently, the indicator is still hovering in oversold territory below 30.00. As a result, BTC is unlikely to revisit yesterday’s low of $ 4,048 for now.

Further, the correction looks set to gather pace, as the RSI on the 3-day chart has dropped into the oversold region for the first time since January 2015.

3-day chart

Oversold readings on the RSI tend to put a bid under the cryptocurrency, historical charts show.

For instance, BTC bottomed out at $ 275 in the first week of October 2014 – with the sell-off looking overdone as per the RSI – and rose to highs above $ 400 in the next few days.

On similar lines, the oversold conditions signaled by the RSI in January 2015 likely triggered a recovery rally, pushing prices above $ 300 by mid-month.

As of writing, the RSI is hovering well below 30.00. Therefore, the cryptocurrency looks due for a break above $ 5,000.

4-hour chart and hourly chart

The bullish RSI divergence, seen on both the hourly and 4-hour charts, also indicates the recent sell-off has likely run out of steam near $ 4,000 and a relief rally could be in the offing.

Daily chart

On the daily, the primary trend remains bearish, as the 5- and 10-day exponential moving averages (EMAs) are sloping downwards. These averages, currently at $ 4,854 and $ 5,242, respectively, could cap any corrective rally.

View

  • Bitcoin could rise above $ 5,000 in the next few days, as per the oversold RSI on the 3-day chart.
  • The overall bearish outlook would be invalidated if the corrective bounce ends up pushing prices well above the 10-day EMA of $ 5,242.
  • The sell-off would resume if BTC finds acceptance below the 200-week EMA of $ 4,182, opening the doors for a drop below the psychological level of $ 4,000.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View

Let’s block ads! (Why?)

Bitcoin – CoinDesk

Comments (No)

Leave a Reply

Powered by WP Robot

PHP Code Snippets Powered By : XYZScripts.com