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After the recent rally from the lows, one indicator has reached overbought levels last seen in Dec. 2017, according to Bloomberg Intelligence analyst Mike McGlone. Historically, such overbought levels have resulted in multi-week downturns and McGlone expects one to start after the recent up-move.
Many times, the signals provided by the indicators turn out to be false. More so at the bottom or the top because sentiment takes a long time to change. For the traders to become bullish after a prolonged bear phase is difficult. On numerous occasions, the first rally from the lows can reach overbought levels but this is not similar to the overbought levels as seen following an extended uptrend. Therefore, it is not a foregone conclusion that a similar outcome will follow.
While a minor correction or a consolidation is possible, a retest of the yearly lows looks unlikely. More so, after a number of altcoins have risen way above their lows and look to have started a new uptrend. But, as there is a large overhang of supply at every higher level, the rise will be gradual, with intermittent dips.
Bitcoin (BTC) momentarily ascended above $5,300 but failed to sustain. However, it has been gradually moving up for the past four days even though the RSI is deeply overbought. This is a bullish sign. If the price does not correct within the next few days,