Long-Term Indicator Suggests Bitcoin Price May Be Nearing Bottom

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  • Bitcoin’s weekly MACD has diverged in favor of the bulls. The indicator carved out the next low in December, despite the fact that bitcoin’s worth slipped to $three,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 might be nearing a long-term backside or might have carved out one close to $three,100 in December. That stated, 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 may rise above $Four,000 if the inverse head-and-shoulders neckline, at present at $three,735, is breached. A draw back break of the wedge sample seen within the Four-hour chart may yield a re-test of $three,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 assist.

The next sell-off got here to a halt close to $three,100 in December – 18 months forward of the mining reward halving – triggering hypothesis that the cryptocurrency may 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, nonetheless, may 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  normally strikes within the path of the value development and signifies the power of a transfer.

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

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

Weekly chart

On the weekly chart, the MACD has produced the next low in favor of the bulls. It’s price noting comparable 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 cause 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 robust assist final yr – would affirm a long-term bearish-to-bullish development change. As of writing, that common is positioned at $5,334.

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

Four-hour chart

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

A wedge breakdown, nonetheless, would weaken the bullish case put ahead by final Friday’s high-volume bullish breakout and shift danger in favor of a drop to $three,400.

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

Bitcoin picture by way of Shutterstock; charts by Buying and selling View

About Tom Greenly

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