As Bitcoin's price drops, the relative strength index (RSI) has reached its lowest levels in months, leading traders to speculate a potential short-term bounce.
BTC Price Dip and RSI Impact
Bitcoin's 5% daily drop has had a significant impact on short-term RSI. On the hourly chart, RSI fell from local highs of 81.7 to three-month lows of just 16.6 in a single day. This unusual occurrence rapidly shifted BTC/USD from an 'overbought' to 'oversold' state.
Traders' Response to Sudden Changes
Following these events, traders quickly suggested that BTC price was poised for a short-term upward bounce amid RSI overreaction. Commentators like Bitcoin Munger noted, '1-hour Bitcoin RSI is at 16 and 4-hour almost completely reset,' typically indicating a precursor to a price increase.
January Forecasts
Meanwhile, bearish BTC price targets continue to circulate, predicting new local lows in January. These include expectations for a return to levels below $90,000. Some traders, such as Bluntz, utilize Elliott Wave Theory to confirm their forecast of new lows within the next two weeks.
RSI's drop to record lows has caught the attention of traders forecasting a short-term bounce in Bitcoin's price. However, January forecasts remain mixed, adding uncertainty to the market's future behavior.
