2020-3-18 21:54 |
The Bitcoin price decreased by more than 40 percent over the previous week. This caused most indicators to show oversold levels. One such indicator, in particular, gave a signal that has preceded significant pumps in its previous history.
Bitcoin (BTC) Price Highlights The Stochastic RSI has fallen below 20. This is the ninth time it has done so since December 2017. In 7/8 previous times, the Bitcoin price has pumped afterward.Trader @Crypto_Rand outlined a BTC chart and stated a previous occurrence in the Stochastic RSI, which has caused a 40 percent pump in the majority of past cases.
#Bitcoin | When the Stoch RSI has been under 20 points:
Seven times out of eight, the price has pumped an average of +40% on the following weeks.
We are under 20 points now. pic.twitter.com/B0TMgLvykf
— Crypto Rand (@crypto_rand) March 17, 2020
Let’s take a closer look at the BTC price movement along with the stochastic RSI in order to determine if the price will act the same way this time.
Stochastic RSIThe tweet uses the Stochastic RSI in order to predict the future movement. More specifically, it has isolated eight cases since December 2017 in which the Stoch RSI has been below 20. They are:
February 5, 2018 – (94.5 percent) April 23, 2018 – (57.25 percent) June 25, 2018 – (45.97 percent) December 10, 2018 – (35.83 percent) August 26, 2019 – (16.93 percent) September 10, 2019 – (38.51 percent) December 2, 2019 – (65.13 percent)Each time, the Bitcoin price increased by at least 35 percent, with the exception of the bounce on August 26, 2019, which was still relatively formidable at 17 percent.
However, what the indicator fails to capture is the time it took from the moment the RSI crossed below 20 to the moment of the bounce. For example, the RSI stayed below 20 for 25 days prior to the bounce on February 5 and for 14 days prior to that on April 23. The current RSI has been below 20 for only seven days.
Finally, the RSI is created out of two lines, the short-term one (white) and the longer-term one (black). During each of the previous bounces, both the short and long-term lines had been below 20. This is not the case in the current movement since only the short-term one has crossed into oversold territory.
Therefore, while a bounce could occur based on the previous history of the Stoch RSI, it might not transpire for a few more weeks. In addition, this indicator does not state that BTC has reached a bottom, rather than a relief rally is likely to occur.
The post This Bitcoin Indicator Predicts a 40% Price Increase appeared first on BeInCrypto.
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