Lengthy-Time period Indicator Suggests Bitcoin Worth Could Be Nearing Backside

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  • Bitcoin’s weekly MACD has diverged in favor of the bulls. The indicator carved out a better low in December, although bitcoin’s worth slipped to $3,100, signaling waning bearish pressures 17 months earlier than the mining reward halving. Bitcoin witnessed an identical MACD divergence 17 months earlier than the earlier halving in July 2016.
  • The bullish MACD divergence signifies the cryptocurrency could possibly be nearing a long-term backside or might have carved out one close to $3,100 in December. That mentioned, a transfer above the 21-month exponential shifting common (EMA), at present at $5,334, is required to substantiate a long-term bullish reversal.
  • Bitcoin might rise above $4,000 if the inverse head-and-shoulders neckline, at present at $3,735, is breached. A draw back break of the wedge sample seen within the 4-hour chart might yield a re-test of $3,400.

A protracted-term worth indicator validates a rising consensus amongst traders that bitcoin (BTC) is near bottoming out.

BTC fell beneath $6,000 on Nov. 14, dashing hopes of a long-term bullish reversal from that long-held psychological help.

The following sell-off got here to a halt close to $3,100 in December – 18 months forward of the mining reward halving – triggering hypothesis that the cryptocurrency might backside out in 2019. It’s price noting that BTC created a long-term backside in January 2015 earlier than present process a reward halving in July 2016.

Whereas traders are betting that historical past will repeat itself, bitcoin’s corrective rally from December lows is struggling to choose up the tempo.

That, nevertheless, might change within the close to future, because the bitcoin’s shifting common convergence divergence (MACD) – a momentum indicator primarily based upon worth shifting averages – is signaling waning bearish pressures.

The MACD  often strikes within the route of the value pattern and signifies the energy of a transfer.

Bitcoin’s weekly MACD, nevertheless, has diverged from the first bearish pattern, i.e. the value hit a decrease low close to $3,100 in December, whereas the MACD carved out a better low. A bullish divergence is broadly thought-about an indication of vendor exhaustion and is commonly adopted by pattern reversal.

As of writing, BTC is altering palms at $3,570 on Bitstamp, having hit highs above $3,700 final week.

Weekly chart

On the weekly chart, the MACD has produced a better low in favor of the bulls. It’s price noting {that a} related bullish divergence was charted over the 5 months main as much as January 2015, when BTC bottomed out close to $150.

So, there’s a purpose to consider the cryptocurrency is nearing, or has already reached, a significant backside.

Consequently, the likelihood of BTC witnessing a bullish reversal within the subsequent few months is excessive. A convincing transfer above the 21-month exponential shifting common (EMA) – a degree which acted as sturdy help final yr – would affirm a long-term bearish-to-bullish pattern change. As of writing, that common is positioned at $5,334.

In the meantime, the prospects of a short-term rally to $4,000 would enhance if BTC clears the resistance at $3,735.

4-hour chart

BTC has carved out a falling wedge sample – a bullish continuation sample – on the 4-hour chart. A transfer above $3,585 would affirm a wedge breakout and will yield a rally to $3,735, which is the neckline of the inverse head-and-shoulders bullish reversal sample. A violation there would open up upside towards $4,100 (goal as per the measured transfer technique).

A wedge breakdown, nevertheless, would weaken the bullish case put forward by final Friday’s high-volume bullish breakout and shift threat in favor of a drop to $3,400.

Disclosure: The creator holds no cryptocurrency belongings on the time of writing.

Bitcoin picture by way of Shutterstock; charts by Trading View

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