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- The three-day Bitcoin chart shows a bullish cross between exponential moving averages at 5 and 10 days for the first time since July. The crossover seems decisive, as the two EMAs now have a north orientation, thus validating the bearish upward trend shift signaled by the break-up of the high-volume triangle visible on the 3-day chart.
- Cryptocurrency could test the December highs above $ 4,200 in the short term.
- A slight decline to $ 3,800 could be observed in the next 24 hours, with signs of bullishness appearing on the hourly and 4 hour charts.
- The bullish case would weaken if BTC found an acceptance lower than $ 3,614 (the lowest of the previous three-day candle), but that seems unlikely at the moment.
A closely followed bitcoin price indicator (BTC) became bullish for the first time in seven months, indicating a shift in the market trend.
On the chart in three days, the five-candle exponential moving average (EMA) crossed the EMA at 10 candles from below – the first decisive bullish cross since July 17, 2018.
At the time, BTC traded above $ 7,300 and the crossover was followed by a rebound reaching $ 8,400 on July 24th.
Moving average crosses help identify gear changes. A bearish upside shift is confirmed when a short-term moving average crosses a long-term average from below.
Many would say that EMA crossings are late indicators. While this is true, crosses between short duration averages help traders distinguish between bullish and bearish scenarios. Long-term AM crosses like the "gold cross" (bullish cross between 50 and 200 day MAs) often function as contrary indicators.
The latest positive crossover of the three-day chart confirms the break-up above $ 3,800 earlier this week. As a result, peaks in excess of $ 4,200 in December may soon be put to the test.
As of this writing, BTC was trading at $ 3,894 on Bitstamp, after peaking at $ 3,990 earlier today.
3 day chart
As noted above (left), the 5-day and 10-day EMAs produced a decisive cross-breeding, that is, the averages are oriented north after the bull crossing. The chart on the right shows the July bullish cross. After a brief recovery after the crossing, the averages became uniform over the three months to 14 November, offering little directional bias.
In the current scenario, BTC's last three-day candle closed at $ 3,936, confirming a break in the triangle, which also indicates a bearish trend shift to bullish. In addition, the candle closed well above $ 3,711, validating the upside external inversion created during the three days prior to February 15th.
Even then, peaks in excess of $ 4,200 in December may not come into play immediately, as short duration charts have become bearish.
4 hour chart and hourly
The long, tall shadows attached to several candles on the 4-hour chart indicate a bullish burnout in the range of $ 4,000.
The relative strength index (RSI) on the 4-hour chart also moved out of the overbought territory and heads south. Meanwhile, the RSI on the hourly chart has become bearish below 50.00.
As a result, BTC could revisit $ 3,800 before resuming the rally to $ 4,236 (December 24th high) as suggested in the three-day chart.
The 50-hour AM stacking order, higher than the 100-hour MA, higher than the 200-hour MA, also indicates that any downturn to $ 3,800 could be short-lived.
Disclosure: The author does not hold any cryptocurrency badets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View
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