While traders panic after eight negative weeks on the market, it could be main reversal sign
Bitcoin’s performance in May put the first cryptocurrency in conditions the market had never seen before as it painted eight consecutive negative weeks. But while some investors are maniacally dumping their holdings, others believe that Bitcoin is slowly becoming oversold and may see a retracement soon.
Never seen before
Eight consecutive weeks of losses on Bitcoin is something that traders and investors have not seen before, but according to the BTC chart, it results from a massive rally started on Bitcoin back in November 2020.
Returning to the ATH, Bitcoin has posted nearly 300% year-to-date gain, with its price reaching nearly $70,000. The run between 2020 and 2021 was the longest bull run the premier cryptocurrency has seen in its trading history. The 2020-2021 rally was almost twice as long as the race we saw in 2017.
Oversold indicator
Daily and intraday timeframes already suggest that Bitcoin has reached the oversold zone as it has been under heavy selling pressure since the beginning of the year, but on the weekly chart, BTC just barely becomes oversold after being heavily overbought back in November.
Although the number of consecutive weekly candles can be considered an oversold/overbought indicator, the main way to determine the state of the market is the relative strength index.
According to the technical indicator, RSI is barely moving under the value of 35, which makes the analyzed asset barely oversold and may not be an indicator of an immediate reversal.
The closest support line for Bitcoin is the 200-week moving average located at around $27,000. At press time, Bitcoin is testing the $29,000 support and, in the event of a breakout, could move directly to the aforementioned support.
