Bitcoin Short-Term Bounce Faces Resistance at $40K
Extreme oversold readings preceded an uptick in BTC.
Jan 24, 2022 at 7:29 p.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/FRFBV435EBCCPHIBOHFYBBKQHU.png)
Bitcoin daily price chart shows support/resistance with RSI on bottom (Damanick Dantes/CoinDesk, TradingView)
Bitcoin (BTC) returned above $35,000 after multiple oversold signals appeared on the charts. The cryptocurrency faces initial resistance at $40,000, which could limit upside over the short term.
Bitcoin is up 3% over the past 24 hours after rising from an intraday low near $33,000, while the broader crypto market has stabilized.
The relative strength index (RSI) on the daily chart registered the most extreme oversold reading since the March 2020 crash. The previous extreme low was on Nov. 20, 2018, which preceded a few months of rangebound price action before a rally took place.
For now, a downtrend of lower price highs since November remains intact, which means sellers could remain active at resistance levels.
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Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.
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