A technical indicator suggests Bitcoin may be on its way to recovery after sustaining its biggest weekly drop since November.
The trading envelope indicator, which tracks the upper and lower bands of the trading range to determine if a particular asset is overbought or oversold, shows the largest digital currency may regain its losses and surge past its recent highs, reports Bloomberg.
The indicator signals oversold conditions when the price of an asset hits the lower band of the envelope. It indicates overbought conditions when the price touches the upper band of the envelope.
BTC breached the lower band after climbing to $8,886 on Monday, indicating a potential rally could be at hand. If BTC were to test the upper limit, it would rise as high as $10,600.
The envelope indicator foreshadowed Bitcoin’s rally in December when BTC hit the lower band and saw its price increase by more than 10% in the following week.
Despite the bullish signal, Bitcoin may remain at the whim of macro economic trends. As the global economy suffers due to fears of the coronavirus, Bitcoin’s recent movements continue to reflect that of the stock market.
SPX vs BTC over the last month. pic.twitter.com/M7DeBsUPcQ
— Travis Kling (@Travis_Kling) February 27, 2020
Recent price action suggests traders may want to consider traditional market conditions in order to get a better overview of the crypto markets and to gauge where they’re heading next.
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