Bitcoin triggered a weekly oversold signal for the first time since June 2022.
TL;DR
Bitcoin's weekly RSI fell below 30, signaling oversold conditions for the first time since June 2022, as its price dropped under $71,000. This indicator helps assess market trends, though oversold doesn't guarantee a price bottom.
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On February 5, according to Tradingview data, as the price of Bitcoin fell below $71,000, Bitcoin triggered a weekly RSI oversold signal for the first time since June 2022, currently trading at 29.21.
RSI, short for Relative Strength Index, is one of the most commonly used technical analysis indicators in financial markets such as stocks, futures, forex, and cryptocurrencies. Proposed by American technical analysis master J. Welles Wilder in 1978, it is primarily used to measure the speed and magnitude of price changes, determining whether the market is overbought or oversold, thus helping investors find potential reversal or trend continuation signals. Generally, an RSI value below 30 indicates that the market has entered oversold territory.
An oversold signal on the RSI does not necessarily indicate that the price is at an absolute low. In June 2022, Bitcoin briefly fell below $18,000, with an RSI of approximately 26.2. In November of the same year, Bitcoin fell to $15,600 following the FTX collapse, but the RSI was 31.4, showing a divergence from the June low (i.e., the price hit a new low, but selling pressure eased).