Bitcoin (BTC) is currently hovering around resistance on the three-day RSI. This is the fourth time this level has been hit. Over a year old, this area could be the key to knowing the direction of BTC in the near future. But what impact could this resistance have on the price of bitcoin?
Bitcoin (BTC): what does it mean?
By definition, the RSI is a technical indicator, an oscillator, which measures the strength of sellers and buyers in the market.
On the Bitcoin chart (BTC/USD), we can clearly see that it is neither overbought nor oversold. This is because the RSI, on a three-day scale, is currently around 45. This can be interpreted as a tie between the strength of sellers and buyers.
However, this psychological level should not be neglected. Indeed, each time the bitcoin comes up against this resistance, it suffers a fairly substantial loss in value. To be precise, the last touch caused it to suffer a 60% loss in value until July. Thus, it can be concluded that this is a major resistance on the price of BTC.
Bitcoin (BTC): what direction will it take from this resistance?
A real battle is taking place around this resistance. Let’s look at the two most likely scenarios:
- Buyers weaken: as they liquidate their long positions from the low. This will lead to a fall in the price of bitcoin. Based on historical data, it may cause this crypto to lose 50% of its current value. A fall in bitcoin towards $12,000, from resistance, would then be imminent.
- The buyers are strengthening their long positions: which will lead to a breakout of this resistance zone. Accompanied by a large volume, this breakout is likely to project the price of BTC towards $34,000.
That said, the direction that bitcoin will take is still a little unclear. But what is certain is that this resistance on the three-day RSI will play a decisive role. Combining this indicator with volumes could help you make a good decision. If the price breaks this resistance with low volume, taking a short bitcoin position will be the most appropriate.
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