The cryptocurrency market has started moving again after a low-volume week, with most digital assets trading in a consolidation range.
However, some cryptocurrencies register an oversold status due to huge losses suffered in recent weeks. This could create a buying opportunity for the next few days if these projects have strong fundamentals to fuel demand.
Notably, Bitcoin’s (BTC) price action evidenced the consolidation range after a downtrend from January 12 to January 22. The leading cryptocurrency slightly recovered from the drop, entering an 8-day consolidation range broken on January 7.
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As of writing, BTC trades at $45,092, back to its price level three weeks ago, before the short-term downtrend. This movement could propel oversold cryptocurrencies into a bullish trend moving forward.
BTC/USD daily price chart. Source: TradingView
Buy signal for an oversold XRP
In particular, Finbold spotted an oversold XRP at CoinGlass’s weekly Relative Strength Index (RSI) heatmap on February 8.
The sixth-largest cryptocurrency by market cap trades at $0.515 by press time, up 2.5% in seven days. Interestingly, its daily RSI remains weak at 43.35, while lower time frames position XRP in a surging momentum.
In the meantime, XRP’s weekly RSI registers 27.69 points, making it one of the last oversold cryptocurrencies this week. The short-term price action could trigger a reversal from this zone if further developments play favorably.
Ark (ARK)
Another potentially oversold cryptocurrency is Ark (ARK). The token has a 28.23 weekly RSI, trading at $0.849 and up 3.35% as of writing. Like XRP, ARK signals a trend reversal with its low time frame RSIs.
Interestingly, the average weekly RSI for the crypto market is 57.11, increasing the relevancy of projects below that line.
Nevertheless, having an oversold RSI status does not guarantee price recovery. Understanding why this extreme weakness indicator is vital for investors looking to buy signals. The cryptocurrency market is highly volatile, and projects usually respond aggressively to news and relevant events.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
