Justin Bennett: Bitcoin Could See A Major Rally Based On Historic RSI
According to Justin Bennett, a prominent crypto market analyst, one specific metric could explain where the price of Bitcoin (BTC) is headed after yet another price correction.
In a recent video update, the analyst looks into Bitcoin’s relative strength index (RSI), a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions.
Bennet takes a look at BTC’s RSI on a daily time frame, and points out that last month’s chart action looks very similar to the summer last year.
“Now recently ever since these highs up here (~$60,000-$66,000) from the price we saw the RSI do something very similar. We had these lower highs that formed a trend line. This trend line broke her back here (Jan 2022), it made a run up just like it did back here (Aug 2022) and now it’s pulling back.
What’s interesting about this though [it] is at the level where the RSI is pulling back right now. You can see that it lines up exactly to what we saw back here in September. Right now the RSI’s bouncing right from that same level, and obviously this was right when we saw Bitcoin put in a low and then go on a big move.”
Bennett also points to RSI indicators from spring and summer last year, as well as last month when Bitcoin dropped to $33,000.
“I do find it very interesting that the RSI is bouncing from the same level that it did back here (Sept/Oct 2021) after a breakout from a downtrend, and furthermore the RSI back here at these lows between May and July (2021) is also very close to this low that we saw down here (Jan 2022) at $33,000.”
As a summary, the analyst notes that the technicals for Bitcoin look positive while the fundamentals not so much. Now it’s a question of whether the buyers are interested to enter the market.
“The fundamentals don’t look great, but the technicals are there. So if buyers decide that now is the time to push the price higher, I think that all the technicals are there for it to happen. We’ve seen the market bounce from a confluence of support. We have an hourly descending broadening wedge which is technically a bullish pattern.
We have bullish divergence on the RSI because if we look here on the hourly (Feb 17 onwards) we can see the RSI starting to make higher lows as the market has been making lower lows. We also have the RSI on the daily that I just showed you bouncing for my key level we saw in 2021. There are a ton of indicators here pointing to a potential rally in the future, but buyers have to confirm it.
If Bitcoin can reclaim this area ($38,500-$39,600), then in my opinion we are looking at a move at least back toward $46,000, if not up toward the $50,000 area.”
At the time of writing, Bitcoin is trading at $38,551 within Bennett’s important reclaim area.
