But in some cases, when FOMO begins, even technical indicators begin to behave irrationally. The Relative Strength Index, for example, is an oscillator that tells a trader when an asset is oversold or overbought. The idea is that when a reading is above 70 an asset is overbought and nearing the end of its trend.
The same monthly timeframe also shows another anomaly: Bitcoin price has never gone into oversold territory according to the monthly RSI.
This is all happening while both Bitcoin price and the RSI itself are beginning to build upon a parabolic base. All this behavior suggests that the cycle isn’t over, and another wave up is about to ensue.
The Trend Line Separating A Bull And Bear Market
A different look at the RSI and a descending trendline, drawn with a dotted line below, could provide a clue as to where the trend will end. Falling back below a reading of 70 will confirm a bear market is here.
That would leave very little room between that level and the promised land of $100,000 and above – where the coming mania will likely come to an abrupt end, much like the same RSI has shown happens at the conclusion of each cycle.
Falling below 70 during this cycle will either be a bear trap that is confirmed this month, or the shortest time spent on the bull zone in Bitcoin’s entire history – which one is it?