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Spotting oversold cryptocurrencies with trend reversal indicators can be a valuable buy signal for crypto investors using technical analysis.
Essentially, an oversold buy signal appears for an asset showing extreme weakness with the Relative Strength Index (RSI) in higher time frames. While, at the same time, having a divergence in lower time frames suggests a trend reversal.
This happens because the market moves in volatile cycles. Thus, any movement will inevitably face a correction to the other direction.
Looking for insights, Finbold gathered data from CoinGlass’s RSI heatmap, spotting the only two currently oversold tokens.
Jupiter (JUP): Oversold in the 24-hour RSI
First, Jupiter (JUP) experienced consecutive sell-offs, dropping its 24-hour RSI to the oversold zone at 29.92 points. However, the three lower time frames suggest a strong momentum, which could cause a reversal.
JUP is trading at $0.477, up 3% in the day. Notably, Finbold featured this token as a cryptocurrency to avoid trading on February 2 in the expectation of a sell-off due to its massive airdrop.
Ark (ARK): Oversold in the weekly RSI
Ark (ARK) surges as the only oversold cryptocurrency in the weekly time frame. Interestingly, we can see dashed lines in the chart indicating cryptocurrencies that quickly changed their RSI from oversold to strong.
In particular, ARK has a 24.88 7-day RSI. The buy signal takes shape with the 24-hour RSI moving towards neutral at 43 points. Ark’s token has lost 10.95% in the past week, trading at $0.848.
Nevertheless, having an oversold RSI status does not guarantee price recovery. The cryptocurrency market is highly volatile, and everything can change in the blink of an eye.
In this context, projects going through problems, discontinuation, or massive dumps can also present an oversold status and continue in a bearish trend. Therefore, investors must be cautious and understand what they are buying.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.