Bitcoin’s price has been in a corrective phase since its December 2018 highs, but BTC’s latest positive momentum offers bullish divergence on the stochastic oscillator, which indicates the price trend is becoming more erratic, with the trend reversal likely to take place in the form of a breakout. A breakout usually follows a period of consolidation or sideways price action. In order to confirm a breakout, traders should look for a sustained move upwards towards the next resistance level at $33,000.
The last time Bitcoin’s price moved higher in dollar terms, it did so by more than $2,000 and triggered a notable bullish divergence in its relative strength indicator (RSI). Today, that RSI divergence is still in play as Bitcoin’s price hovers around $33K.
On February 7th, a bullish market sentiment indicator (the Relative Strength Index, or RSI) showed a divergence in trend. As a result, the RSI, in conjunction with the price action, signaled a reversal in Bitcoin’s trend. As of this writing, the Bitcoin price is still holding near $3300, which is a 2.44% gain since the divergence.
The recent decline in the bitcoin (BTC) market is likely to run out before a true bearish breakout is confirmed, as reflected in the classic momentum-based oscillator.ROI constitutes higher valleys
This indicator, the Relative Strength Index (RSI), measures the speed and change in direction of price movement. It works in a given number range, from 0 to 100. The closer the RSI is to 0, the weaker the price momentum. Conversely, an RSI value close to 100 reflects a period of strong momentum.
This section also indicates the ability to buy and sell the asset. More specifically, an RSI value below 30 means that the asset is oversold and therefore worth buying. At the same time, an ROI above 70 indicates that the asset is overbought, meaning that the owners will eventually sell it for a profit.
The RSI also allows traders to identify buy/sell opportunities based on divergences in price and momentum. For example, when the price hits a new low and the RSI hits a higher low, this is considered a buy signal – an upward divergence. Conversely, a bearish divergence of the RSI occurs when the price makes a new high and the RSI makes a lower high.
So it looks like bitcoin is confirming the bullish divergence.
Independent market analyst CryptoBirb has noticed a price divergence on bitcoin’s overnight chart. In it, the pseudonymous firm noted that BTC/USD formed a series of lower lows around the same time that its RSI rose while forming higher lows.
Bitcoin is expecting a retest of the dominant channel support line after the recent pullback. Source: TradingView.com.
Konstantin Anisimov, CEO of CEX.IO, also noted that accredited investors are starting to distance themselves from bitcoin because of its impact on the environment. He added that the greatest interest in cryptocurrencies will return as miners switch to sustainable alternative energy sources.
When environmental concerns are no longer at the forefront, many institutional investors are likely to return to trusting the digital currency and thus buying more of it, Anisimov told Cointelegraph, adding:
Bitcoin has a short-term outlook of $50,000 and a longer-term outlook of $75,000.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and every transaction involves risk. So you need to do your own research before making a decision.Bitcoin’s track record of breaking $3,000 hasn’t been perfect, but it has been remarkably stable, especially given the market’s volatility on a day-to-day basis. In fact, the cryptocurrency has recently risen above the $33,000 mark, hitting a new all-time high above $33k for the first time since last May. This represents a significant upswing in Bitcoin’s price following a string of sideways price action over the last few months, so what’s the reason for such a significant move?. Read more about $900 billion ad for bitcoin and let us know what you think.
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