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Bitcoin Short-Term Bounce Faces Resistance at $40K

Extreme oversold readings preceded an uptick in BTC.

Updated May 11, 2023, 6:21 p.m. Published Jan 24, 2022, 7:29 p.m.

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.

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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.