What’s more, the Relative Strength Index (RSI) is working on breaking higher, implying further upside, and the bullish engulfing candle structure may suggest a reversal of the bear trend for the time being.
According to a chart from Scott “The Wolf of All Streets” Melker, a popular crypto asset trader and DJ, this sudden breakout has seen BTC move above a key descending wedge and foray above a previous swing low/resistance.
Bitcoin has finally started to show some life on its short-term chart once again. In the past 8-odd hours, the cryptocurrency has rallied off its $9,150 bottom, moving up 7% to $9,800 where it stands now.
It isn’t clear if this is the bottom of this ongoing downturn, which could last upwards of six weeks should history repeat itself, but one analyst claims that for now, the drop should be over. Analyst CryptoHamster laid out a number of reasons why this is.
$BTC 4 Hour
Bullish (35 minutes left to confirm). Descending wedge smashed, previous swing low broken (want to see it hold). RSI working on breaking resistance. Bullish engulfing candle (some would debate this). Tweezer bottoms. This is what reversals should look like. pic.twitter.com/wW3hSeOT9u
– The Wolf Of All Streets (@scottmelker) July 17, 2019
Firstly, the one-day Relative Strength Index (RSI) and the Stochastic iteration of this indicator are at their lowest levels since at least February, entering the “oversold” range. The one-day Moving Average Convergence Divergence (MACD) has tapped the zero level, despite the fact that Bitcoin is in a raging bull market according to most analysis.
– RSI is lowest from February
– MACD is ->0 level (a new bear market? No!)
– stochastic is at lowest point from December
– Elder’s Forse Index – lowest from November
– historical volatility is almost at 100%
– DI/ADX are like “which drop?”
Drop is over!$BTC #bitcoin pic.twitter.com/RNsrJhGyy5
– CryptoHamster (@CryptoHamsterIO) July 17, 2019
Also, the Elder’s Forse Index, an indicator meant to exhibit the strength of moves, is at its lowest since November 2018; and historical volatility is almost at 100%, implying a move to the upside to return volatility to levels deemed normal.
Per previous reports from this outlet though, a move lower could be had in the coming weeks, maybe after there is some reprieve for bulls like what is being seen now.
Timothy Peterson, a prominent American crypto fund manager, notes that Bitcoin’s current active account figure suggests that BTC is overvalued.
According to Peterson’s model, which takes a 30-day median (as of July 13th) of the number of active accounts on the Bitcoin blockchain, BTC currently has a fair valuation of just above $8,000.
In a tweet issued on Saturday, Josh Rager, a prominent technical analyst and cryptocurrency commentator, looked to this same level.
Rager notes that a “confluence” of chart data and on-chain data suggests that a pullback “would likely bottom out at $8,000”. As he explained in the chart above, $8,000 acted as a key horizontal support and resistance level in the recent rally and 2018’s crash.