The could discover new highs above $300,000 by 2021, according to a popular technical indicator.
Dubbed as the Stochastic RSI, the indicator helps investors identify oversold and overbought conditions inside the market. It indicates a probable change in the direction of a price trend. GalaxyBTC, a pseudonymous analyst, applied Stochastic RSI on the monthly chart and compared the indicator’s past performance with the ’s price behavior.
The analyst found that Stochastic RSI was recovering from its oversold conditions for the first time since October 2015. The last recovery had influenced to pursue a parabolic upside trend, which got exhausted upon establishing approx $20,000 as ’s historic high. In the meantime, the ’s monthly Stochastic RSI had ventured into the overbought territory, where it stayed for approx two years.
The 2018’s infamous crypto crash brought both the price and its Stochastic RSI down. Both the metrics started recovering from ’s bottom-formation nine-months later on December 15, 2018. By January 1, the ’s monthly Stochastic RSI had reversed its trend, as shown in the chart below.
’s Monthly Stochastic RSI Comparison | Source: GalaxyBTC
GalaxyBTC noted Stochastic RSI was repeating the behavior it posted between October 1, 2015, and December 1, 2017. As of today, the indicator was rebounding from its oversold conditions. It’s actual value, represented by the blue line (%K), was approximately 33. Meanwhile, the red line, which represented the Stochastic RSI’s 3-month moving average, was trending below %K following an intersection lately. That was the sign of a bullish reversal.
The Timeline Factor
GalaxyBTC assumed that the current Stochastic RSI would mirror its previous trend reversal move not only in terms of action but also period. The last market action led the RSI indicator into the overbought zone for 792 days. Meanwhile, the price rose from $300 to circa $19,000.
Stoch RSI currently at 2015 pre bull run level (33) and should enter
“overbought” territory in about 1 or 2 months.Last time it lasted 2 years from $300 to $19K.
— Galaxy (@galaxyBTC)
The same logic predicted that the current Stochastic RSI would take a month or two to enter its overbought territory. Then, it will stay there for at least 792 days. In the meantime, the apparent buying momentum will increase the price by a minimum of 6233.33 percent – approx $374,000 – by 2021.
Opinion: Potential Flaws in Stochastic RSI
GalaxyBTC’s theory projects a technical indicator as a flagbearer of ’s next bull run. While the Stochastic RSI has a massive relevance in both the traditional and market, it also has a history of producing false signals. In a volatile market, for instance, a Stochastic RSI indicator has more probability of predicting reversals that do not mature eventually.
It is wise to mix Stochastic with other indicators to understand the real element of a chart. The Heikin-Ashi chart, for instance, can be coupled with other signs to spot trends and changes quickly.
And above all, it is essential to factor in market’s fundamentals, such as its network growth, on-chain transactions, as well as its development as a payment protocol.
above $300,000 is possible, but there are several factors at play not just Stochastic RSI.
Published at Sat, 11 May 2019 22:46:22 +0000
