The relative resistance index (RSI) has formed an uptrend line after returning from the saturation zone, while bitcoin price candles have created a downtrend line. A divergence between the relative resistance index and price candlesticks could be a significant sign of a rise in the price of bitcoin.
to the the report The Telegraph The recent decline of Bitcoin indicates that the market has worn out before receiving confirmation for the massive fall in prices, and the Relative Strength Index (RSI) confirms this.
The RSI measures the strength and change in the direction of market trends simultaneously with price fluctuations. This index works in a certain range of numbers between zero and 100. The closer the RSI chart is to zero, the weaker the price movement, and the closer it gets to 100, the stronger the price movement.
The range specified in the RSI index can help traders identify buying and selling opportunities. On a closer look, when the chart is below level 30, it shows that the asset is in the saturation range; So it can be said that this point is a good opportunity to buy. On the other hand, the RSI above the 70 level indicates that this asset is in the saturation zone; This means that traders must sell the purchased assets to maintain their profits.
In addition, the relative strength index allows users to identify buying and selling opportunities for an asset based on the divergence between price and the RSI chart. For example, when price fluctuations form a downtrend but RSI fluctuates an uptrend, this divergence is upward and is considered a buy signal. Conversely, a downtrend occurs when price fluctuations form an uptrend but the RSI is forming a downtrend.
Therefore, it can be said that there is an upward divergence in the Bitcoin market. A well-known analyst of the digital currency market, known on Twitter as CryptoBirb, has observed the divergence of the Bitcoin price in the 1-day market view. He said that the Bitcoin price candle has formed a downtrend line and almost simultaneously with that RSI has formed an uptrend line.
As can be seen from the chart, the price of Bitcoin has moved down after reaching the level of $ 36,675 on June 29 (July 8) and on Friday the price reached below $ 33,000. The RSI also fell at the same time as the last fall and is now near the 42 level, which is almost a bullish range.
The downward sentiment of the Bitcoin market has continued due to the spread of negative news. News of the ban on the extraction and trading of digital currencies in China and subsequent crackdowns by officials in Britain, India, South Africa and the United States have reinforced sentiment.
For example, the UK Treasury, Baines, banned the world’s largest digital currency exchange from operating in the UK. In addition, the Indian Ruling Authority issued a summons against WazirX, an exchange office of Bainance in India, accusing the institution of facilitating the money laundering process.
The US Federal Reserve also surprised bitcoin investors. The government suddenly decided to raise bank interest rates by 2023. The price of Bitcoin fell 28 percent after the announcement of the Federal Reserve, but after gaining support at the level of $ 30,000, the market recovered somewhat.
However, buyers have not been able to keep the bitcoin price above the $ 40,000 level. As a result, Bitcoin is still stuck in the $ 30,000 to $ 40,000 range, and there is no clear directional movement in the short term.
Konstantin Anissimov, CEO of CEX, has said large investors have distanced themselves from bitcoin because of concerns about the environmental impact of digital currency mining. He believes that if bitcoin miners resort to renewable energy, public interest in digital currencies will increase again.
Anisimov also said:
Once environmental concerns are addressed, many institutional investors will once again trust digital currencies and buy more. Bitcoin will move to $ 50,000 in the short term and $ 75,000 in the long term.