Bitcoin price took a hard stab at $30,000 and although the knife stuck for some time, price is now retracing. The rally, according to the Relative Strength Index, was lacking enough strength to pierce through the armor-like resistance level.
Here is a closer look at the rejection on the RSI, and what it could mean in the short-term price action. We’ll also show you a comparison that might suggest that any dips are for buying, and that when the correction is over, the next time BTC will crack through the key level.
Bitcoin Price Fails To Break $30K Over 70 On The RSI
The crypto market has had a very different year than it did int 2022. Last year, prices simply plummeted for the entire year, making new low after low. But since the start of 2023, the theme has reverted back to “only up.”
However, the weekly Relative Strength Index could be indicating that it was “only up” for the time being, and that time is about to take a pause. The same technical indicator could also be suggesting that after a brief pullback, Bitcoin is more than likely to try again, regaining renewed strength and making it though the next time around.
Related Reading: This “Super” Bitcoin Technical Tool Says Limited Resistance Remains
The Relative Strength Index is a momentum-measuring technical indicator created by J. Welles Wilder Jr. Readings of above 70 signals and overbought market. Conversely, below 30 is an oversold market.
In the chart below, the weekly RSI shows that at the same time we are getting a pullback, the tool is showing a failure to reach overbought conditions.
The weekly RSI failed to reach over 70 on a closing basis | BTCUSD on TradingView.com
Why This Could Be The Pullback Late Bulls Are Waiting For
Normally, an asset reaching overbought conditions on the RSI could indicate a possible reversal. However, Bitcoin behaves abnormally and is most bullish when RSI levels are elevated. The same chart above shows that reaching such levels isn’t necessarily a bad thing.
Failure to make it into the overbought zone, deposit an almost 100% rally from lows, could cause the current move to extend. In 2019, Bitcoin immediately made it into overbought levels and then became bearish for several months again. In 2020, Bitcoin also failed to rise above 70 on the RSI. Following the quick pullback that coincided, Bitcoin then went on a record rally.
There is no telling how deep BTCUSD might retrace now that a pullback has begun. But if the top cryptocurrency by market cap behaves in similar fashion following similar conditions in the RSI and price, could we then see a similar breakout and follow through to the upside once BTC can regain some momentum?
Once again, I can’t shake the red box vibes. All good, as it should be the ideal dip to buy in #Bitcoin
If we do get the pullback, maybe $23K the deepest. Beware, however, wave 1 of 5 can almost fully retrace in wave 2. The chart shows a possible completed wave 1 w/ 5 subwaves. pic.twitter.com/9Jrd2kOuUo
— Tony "The Bull" (@tonythebullBTC) April 17, 2023
Follow @TonyTheBullBTC & @coinchartist_io 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
