Bitcoin Most Overbought in 2 Years After Price Rises Back Above $10K

Bitcoin’s recent price rally is looking as overstretched, according to a technical indicator.

The money flow index (MFI), a momentum indicator that incorporates both price and trading volumes, has risen to 86.00 on the three-day chart. That’s the highest level since late 2017 when prices hit a life-time high of $20,000. A reading above 80 indicates overbought conditions. 

The overbought conditions do not necessarily imply an imminent bearish reversal but likely represent over-exuberant bitcoin buying, since the cryptocurrency has rallied by more than $3,500 over the last six weeks.

Also, markets sometimes enter into very strong trends, in which case the MFI can stay overbought for a prolonged period of time. 

That said, the latest above-80 reading on the MFI has gained credence with bitcoin’s failure to keep gains above $10,350 (Oct. high) resistance earlier today.

The long upper wick on the latest three-day candle represents a failure on the part of the bulls to establish a…