While the crypto market in general is constantly losing value due to global corrections, some indicators show that Ethereum has entered the oversold territory.
The RSI indicator is one of the most popular tools used by traders to determine the strength, stability and probability of a reversal of the true trend. The indicator is also used to identify market divergences allowing traders to see a potential reversal before it actually happens.
To determine whether the asset is in the oversold area or the overbought area, traders use the indicator scale with values between 0 and 100. When an asset enters the zone above 70 of the indicator, the asset is marked as overbought and a pullback is more likely.
When the RSI is below 30, the asset is considered oversold and a pullback is more likely when buying pressure arises.
According to the indicator's data on Ethereum's four-hour chart, the asset has entered the oversold limit, moving below the 30 values. The last time the RSI was this close for the same asset was during the global cryptocurrency market correction in May-July, which sent Ethereum below $2,000.
Previous attempts have “failed successfully”, resulting in a strong rebound almost every time, creating local bottoms. This time, the RSI falls below the level of March 2020, reaching below 30 for the eighth time.
At the time of writing, Ethereum is trading at $3,745 after losing 10% of its value in the last two days of trading. Ether has retraced more than 23% since hitting ATH of $4,870 on Nov.