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Bitcoin finds a bottom after plunging from highs: technician

Bitcoin has recouped the week’s losses and is in rally mode as trade threats keep equities on the back foot. One market strategist says the major cryptocurrency may have finally found its bottom.

“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,” Robert Sluymer, head of technical strategy at Fundstrat Global Advisors, told CNBC’s “Futures Now” on Thursday.

Bitcoin has touched its key support level around $7,000 several times this year and recovered. Most recently, prices moved as low as $7,054 this week before bouncing higher.

“That’s certainly the first step in a bottoming process – to see some sort of consolidation or a basing taking hold,” he said.

Momentum also looks positive to Sluymer, indicating a decline in Bitcoin may have found a floor.

“That RSI indicator in the bottom of the chart is very oversold and starting to bottom so that’s really part of that bottoming phase taking hold,” he said.

Bitcoin’s relative strength index, a measure of momentum, is currently trading around 40. A level close to 30 typically indicates oversold conditions.

“The next thing that has to happen is to see Bitcoin actually rally through the downtrend and we use the 15-day moving average, it’s very simplistic, but it’s a pretty good proxy across most markets,” said Sluymer. Its 15-day moving average of roughly $7,800 “will be the next hurdle for it to get through.”

Bitcoin last traded around the $7,800 level a week ago. It has not traded above it since May 23.

“We think the setup is very attractive here,” added Sluymer. “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.”

Bitcoin is up more than 2 percent on Thursday and last traded at $7,558.

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