According to the popular analyst, a key metric could decide whether Bitcoin is heading for a breakout after its sudden price drop earlier in the week.
In a new update on YouTube, Justin Bennett discussion on Bitcoin’s Relative Strength Index (RSI), an indicator that analyzes the cryptocurrency’s candlestick swings over 14 periods.
In the case of Bitcoin, Bennet looks at the daily time frame. The analyst highlights chart moves in summer 2021 as well as last month.
“Price hit highs around $60k to $66k from a similarly moving RSI. These lower highs form a trend line. The trend line has been broken since Jan 2022, went up as in Aug 2022 and is now pulling back.
However, it is interesting to consider the level at which the RSI is now pulling back. You can see it is identical to what we saw in September. Right now the RSI is bouncing up from the same level and of course that applies when bitcoin is low and then has a big move.” .
Source: Justin Bennett
Next, Bennett highlighted two previous RSIs from spring and summer 2021 and January when BTC fell to $33,000.
“Actually, I find it very interesting that after the downtrend breakout, the RSI turns up from the same level it was in September-October 2021. Furthermore, the return of the RSI to lows between May and July 2021 is also very close to the lows in January 2022 when prices were trading at $33,000.
Concluding his detailed analysis, Bennett said Bitcoin looks positive technically and he is waiting to see if buyers are ready to enter the market.
“Fundamentals are not looking good, but technical indicators are. So if buyers decide that now is the time to push prices higher, I think all the technical factors are making it happen. We’ve seen the market bounce off the confluence of supports. BTC has an hourly widening descending wedge. Technically, this is a bullish pattern.
BTC has a bullish divergence on the RSI because if you look at the hourly chart from February 17th, you can see that the RSI started making higher lows while the market was making lower lows. Also, the daily RSI jumps to a critical level from 2021. There are many indicators here pointing to a possible future rally, but buyers need to confirm that.”
The analyst said the confirmation will come from Bitcoin closing above the trendline at around $38,500 and then closing the day above $39,600.
“If bitcoin can regain this range, I think BTC is aiming for a move at least back to $46k, if not into the $50k region.”
Join CoinCu Telegram to keep track of news: https://t.me/coincunews