A widely-tracked technical indicator is signaling a weakening of upward momentum amid bitcoin’s renewed push toward record highs.
The 14-week relative strength index (RSI), a momentum indicator, has formed a lower high this year, decoupling from the continued uptrend in prices for bitcoin (BTC).
The RSI’s bearish divergence indicates uptrend fatigue and suggests scope for a bull market correction.
The cryptocurrency fell sharply following the confirmation of RSI’s bearish divergence in February 2017 and August 2017 (above right).
Bitcoin peaked at $13,880 in June 2019 with a bearish divergence on the weekly chart. That resistance was topped in October 2020 (above right).
The leading cryptocurrency is currently trading at $56,500, for a 95% year-to-date gain, having narrowly missed on Thursday the record high of $58,332 reached Feb. 17.
A convincing move above the psychological resistance of $60,000 would likely lift the RSI above its down trendline. That would invalidate the bearish divergence and may invite stronger chart-driven buying pressure.
Also read: Bitcoin’s Put-Call Ratio Hits 9-Month High, But That’s Not Necessarily Bearish