The index has remained trapped between a narrow trading range above $37k for a while now but several on-chain indicators including the Relative Strength Index (RSI indicator) show there is potential for a price breakout above $40k.
Data from TradingView, a popular trading analytics platform shows that the sustained situation above $37k in the last few days has resulted in an improvement in the RSI indicator. The deep dive of the indicator into “oversold” conditions is now apparently over as the RSI is now improving. The analytical tool has been flashing red for the last two months or so as the index lost more than 50% in value at one point earlier this month from its all-time highs of $69k.
Crypto Ed, a popular online trader and commentator tweeted:
“It seems that everyone is watching a trend line. But nobody is paying attention to the RSI….it already broke out of that downtrend”.
But, he also cautioned against expecting a big price increase. He said that one shouldn’t expect something big like a new all time high but he does expect the digital asset to report some upside in the near future based on the RSI’s recent performance.
Coming back and it seems that everyone is watching a trend line.
But nobody is paying attention to the RSI….it already broke out of that downtrend!
Before you think I’m calling for new ATH’s: we’re not out of the woods yet, but seeing more up short term. pic.twitter.com/Uz5Lu4TOf1
— Crypto_Ed_NL *not asking to send DM’s* (@Crypto_Ed_NL) February 2, 2022
There are also other variables that are pointing at a possible price recovery above $40k including whale statistics and HODL data.
But, overall, the RSI Indicator is facing considerable pressure from the bears once again and they are spoiling the recovery party by keeping the bulls in line. BTC has so far failed to go above $39k and a move above $40k is crucial for the bulls, otherwise, the short-term downwards trendline is going to come back into play. Let us not forget that the bears are in control of the overall trend at the moment and that means that the easiest path for digital currency is downwards at the moment, even if the RSI Indicator started upward. The bulls are on the backfoot and will need to showcase their strength above $40k to cement a short-term transition back into bullish territory.
Image Source: pixabay.com
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