Bitcoin on Track for its 8th Consecutive Weekly Loss, Are We Oversold Yet?
Bitcoin (BTC) is on track to record losses for the eighth week in a row, the longest streak of losses in history. The previous biggest consecutive weekly losses were recorded in December 2014, when Bitcoin was worth a few hundred $ and was down for five weeks in a row.
Is Bitcoin Oversold?
Despite the severe sell-off, Bitcoin is still not oversold, at least according to the most popular momentum oscillators.
Bitcoin’s current weekly Relative Strength Index (RSI) reading of 33.67 shows that we aren’t oversold just yet.
The RSI oscillator would need to fall below 30 and even 20 to be considered oversold.
On the other hand, the Stochastic oscillator has entered oversold readings, but unlike the RSI, it has the tendency to stay in oversold readings longer, as it is more volatile and quick to react.
Bitcoin being oversold in 2014
By comparison, in 2014, after the record weekly losses streak, Bitcoin consolidated for 31 weeks before it resumed back higher.
Bitcoin became oversold when its RSI fell below 30 and the weekly Stochastic oscillator entered oversold readings.
Following the oversold condition, the price started to consolidate, and the correction continued for another two months, before the price started to recover.
What does oversold mean?
The term oversold is a common one in the technical analysis lexicon, but what does it mean?
In short, oversold means that an asset has been sold aggressively, and a lot of traders have taken their positions off the table, which can lead to a temporary pause in the trend.
The oversold condition can be temporary, and it can lead to a bounce when buyers start to step in.
However, the oversold condition can continue for a long time. As for the current Bitcoin correction, the oversold condition can lead to a pullback and a pause in the correction. However, the correction is likely to continue in the long-term.
Looking forward: The Bitcoin sell-off can slow down in the near future, and we might see a temporary bottom around the $30,000 considerable round number.
However, in the long-term, the correction can extend all the way to $20,000, which is a massive support level since it is the all-time high reached in the 2017 bull run.
A fall to $20,000 would also allow the RSI oscillator to reach oversold readings.
