Robert Sluymer, head of technical strategy at Fundstrat Global Advisors, has recently stated that bitcoin may be about to recover after finding its bottom. He backs his claims pointing to several technical indicators on the cryptocurrency’s chart.
Speaking at CNBC’s “Futures Now,” Sluymer revealed Fundstrat sees the $7,000 as a key support area, out of which the cryptocurrency may bounce. He said:
“When we step back, we see the first phase starting to happen. We think Bitcoin is starting to bottom off some very key support around $7,000 and we think it's going to start a recovery process here."
Taking a look at the flagship cryptocurrency’s chart shows that it has touched the $7,000 area several times this year, and that it recovered every time it did. The technician revealed he uses a three-phase technical analysis process to predict the future price movements of various cryptocurrencies. The first phase, he said, involves finding a bottom.
Strengthening his argument, he added that the cryptocurrency’s relative strength index (RSI) indicator “is very oversold and starting to bottom so that’s really part of the bottoming phase taking hold.”
The RSI is a measure of momentum that indicates oversold or overbought conditions. Notably, Bitcoin’s RSI is at around 40, with a level close to 30 typically being considered an entry into oversold territory.
Sluymer added that the next thing he expects the cryptocurrency to do is to “rally through the downtrend.” He added Fundstrat uses a 15-day moving average, which may be a simplistic indicator but is “a pretty good proxy across most markets.”
Using the 15-day moving average, the technician noted that bitcoin will now need to get past the $7,800 mark to keep rising. Data shows bitcoin hasn’t hit the $7,800 mark since May 23. At press time, according to CryptoCompare data, the flagship cryptocurrency is trading at $7,713 and is up 1.06 percent in the last 24-hour period.
The analyst added some advice to those that may be looking to enter the market with either a long or short position. He said:
"We think the setup is very attractive here. If you're short we think you should be very careful and reducing your short exposure. I think if you're looking to be long this is where you start adding here to your long exposure."
Notably, Fundstrat Global Advisors’ co-founder Tom Lee is a well-known bitcoin bull, who expects the cryptocurrency to reach new highs in July, and hit $25,000 by the end of the year.