Bitcoin’s key momentum metric hints at bullish divergence as BTC clings to $33K

A recent run-down in the Bitcoin (BTC) market faces the prospects of exhaustion before confirming a full-fledged bearish breakdown, so reflects a classic momentum-based oscillator.

RSI forming higher lows

Dubbed as Relative Strength Index, or RSI, the indicator measures the speed as well as change of directional price movements. It operates within a set range of numbers—between 0 and 100. The close is RSI to 0, the weaker is the price momentum. Conversely, an RSI reading near 100 reflects a period of strong momentum.

The range also helps determine an asset’s buying and selling opportunity. In detail, an RSI reading below 30 means the asset is oversold, thus an attractive buy. Meanwhile, RSI above 70 shows an overbought asset, meaning its holders would eventually sell it to secure profits.

The RSI also enables traders to spot buying/selling opportunities based on divergences between the price and the momentum. For example, when price makes a new low but RSI makes a higher low, then it is considered a buying signal—a bullish divergence. Conversely, a Bearish RSI Divergence appears when price makes a new high but RSI makes a lower high.

So it appears, Bitcoin is confirming a bullish divergence.

Independent market analyst CryptoBirb spotted the price-momentum deviation on Bitcoin’s one-day chart. In there, the pseudonymous entity noted BTC/USD forming a sequence of lower lows around the same period its RSI climbed while forming higher lows.

Bitcoin price dips against a rising RSI. Source: TradingView.com, CryptoBirb

The statement appeared as the BTC/USD exchange rate corrected lower after forming a local top at $36,675 on June 29. However, as of the Friday London session, the pair was trading below $33,000. The RSI fell in tandem with the latest downside move and was near 42 at press time, a neutral-to-bullish area.

Numerous headwinds for Bitcoin

Downside sentiment in the Bitcoin market persisted due to a flurry of pessimistic events. That included a global crypto…

Read More