Over the weekend, bitcoin (BTCUSD) hit a low of $17,585.31, breaking the psychological $20,000 (20K) level. The swing that culminated in this low started on 11 June and resulted in a 40% decline over eight days. Therefore, it is unsurprising that the cryptocurrency's daily RSI registered an oversold reading (blue rectangle).
Currently, BTCUSD is trading above the critical 20K level as its RSI normalised. However, the primary trend's momentum suggests any bounces are likely to be targeted by shorts.
Bitcoin's weekly stochastic is below 20 (green square). This position is suggestive of solid momentum to the downside. The cryptocurrency will be under selling pressure as long as this position maintains. Therefore, rallies on lower times frames become exceptionally compelling to shorts.
Moreover, trying to pick bitcoin's bottom when its primary trend's momentum is biased to the downside is extremely dangerous and, in all likelihood, will contribute to a cryptocurrency panic selling stage.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.