Bitcoin's relative strength index pushes into overbought territory
That's actually not incongruous with the "sustainable" rally
Yesterday, I wrote about how Bitcoin’s recent rally looks relatively reasonable in comparison to the broader market. And yet, the relative strength index (“RSI”), which is used as an indicator to signal “overbought” or “oversold” for a given investment, is showing Bitcoin to be overbought (i.e. over 70):
Now, this may seem contradictory. Is the rally sustainable or stretching into overbought territory? Well, although the RSI is used as a trading indicator, it’s not exactly a perfect science. It’s kind of like reading the tea leaves - similar to how I made a claim about the forward sustainability of the Bitcoin / S&P 500 ratio based on my opinion of a chart.
In fact, the RSI for Bitcoin tends to work opposite how one might expect based on the typical naming convention. Bitcoin is often influenced by momentum and actually tends to outperform in periods following the RSI entering an overbought range. So, if it’s reading overbought, it probably means there are more gains to come.
More Metrics
Initial claims ticked back down
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Industrials and financials are doing really well through October
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