After weeks of huge volatility, some crypto assets are left with significant imbalances that could cause drastic changes. In particular, Finbold spotted two possibly overbought cryptocurrencies in what might be a sell signal for April.
The overbought signal is usually identified through a technical indicator called the Relative Strength Index (RSI). Essentially, it measures the momentum of an underlying asset based on past price action, considering multiple factors.
A strong momentum, above 60 index points is usually positive and indicates an uptrend or a bull market. However, going for extreme strength can often sign the cryptocurrency is due to a correction or trend reversal.
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For example, as Finbold spotted using the CoinGlass RSI heatmap on March 26, looking at the daily and weekly time frames.
Overbought Reserve Rights (RSR) could crash soon
First, Reserve Rights (RSR) is an ERC-20 token for the Reserve Protocol, currently with over $500 million in capitalization.
The token has seen a 12.88% increase in the last 24 hours, trading at $0.01 by press time. Notably, RSR is overbought in the daily and weekly time frames, with 73.48 and 88.78 RSI points, respectively.
This status threatens a massive correction for the supposedly overbought ERC-20 token, which has one of the highest weekly Relative Strength Indexes as of today.
Sell signal for Dusk (DUSK)
Second, Dusk (DUSK) has a similar weekly and daily RSI to the Reserve Rights token. With a 76.35 and 88.16 overbought status, respectively, traders should be aware of a sell signal for DUSK.
The token belongs to a layer-1 blockchain founded in 2018, focusing on real-world assets (RWA) compliance for institutional investors.
Interestingly, DUSK rose over 9.82% in the last 24 hours, coming from a few weeks of positive price action. BlackRock’s recent move toward a tokenization fund and RWA enterprises have fueled the demand for this project, which could now face a short-term retracement.
However, positive developments in the institutional landscape would favor further growth for Dusk, invalidating this technical analysis.
All in all, RSR’s and DUSK’s RSI data suggest a sell signal for these two overbought cryptocurrencies in April. Yet, fundamental aspects could influence an uptrend continuation and investors must trade cautiously in both scenarios.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
