This is a technical analysis post by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
An important technical indicator is flashing a signal that marked the slowdown in bitcoin downward trend in February.
BTC’s price fell below $90,000 early Tuesday, down 28% from the all-time high of over $126,000 reached early last month. With that, the 14-day relative strength index (RSI) – a widely followed measure of price momentum – has dipped below 30, signaling an oversold condition. This means BTC’s ongoing wear has been sharp enough to invite a pause or potential rebound.
But an oversold RSI should never be taken at face value. The indicator can stay in this area much longer than buyers can hold their ground. Many experienced traders view an oversold RSI as a sign of strong downward momentum rather than an immediate trend reversal.
What really matters is whether the price action confirms the signal. Traders should therefore look for new support levels or candlestick patterns, such as Doji or candles with long lower wicks, that suggest selling pressure is easing. If these appear, they will validate the oversold RSI and lay the groundwork for a rejection point.
The last time the RSI dipped below 30 in late February, bitcoin was trading below $80,000. It marked a slowdown in the downtrend, followed by a bottom near $75,000 in early April. Traders would do well to watch for signs of a similar move now.
Because the RSI is so widely tracked by traders, this signal can sometimes become a self-fulfilling prophecy, with collective trading actions based on the indicator amplifying its effect.
