Cryptocurrency analyst and trader Kevin Svenson is warning that Bitcoin (BTC) could undergo a significant correction before revisiting the all-time high.
Svenson tells his 71,200 YouTube subscribers in a new video that Bitcoin is in overbought territory on the weekly chart based on the Relative Strength Index (RSI) indicator.
The RSI measures the price momentum of an asset on a scale of 0 to 100 with a level of 30 and below indicating oversold conditions while a reading of 70 and above suggests overbought conditions.
“[On] the weekly chart for Bitcoin, we’re sitting in a very peculiar position and that is being above the 70 level on the weekly RSI…
If we can’t hold 70, that’s when you get these pullbacks. That’s when things start to come down heavily. As long as we’re bouncing off of 70, that is what I call a power trend. That is when we should expect the trend to be maintained.
If we fail 70, if we come back down, let’s say we bounce off of it and then eventually break below, that’s where you’re going to be looking for your correction. That’s where things are likely going to see some ugly liquidations at that point.”
According to Svenson, Bitcoin is likely to face an “area of heavy resistance” between the $57,000 and $60,000 price level.
“So if we have [spot Bitcoin] exchange-traded fund (ETF) approval plus pumping-like bullish speculation and everybody that has just aped into the market is rewarded, well we’re going to become really top-heavy for Bitcoin.
And if we reach this zone [$57,000 – $60,000] without a correction beforehand, that’s where I would think we would probably see a flush before gearing up for the all-time high break. A final flush is always possible.”
Bitcoin is trading at $43,737 at time of writing.
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