View Bitcoin’s short-term 50-period moving average is edging closer toward the longer-term 100-period moving average on the weekly chart, hinting at a potential bullish “golden cross” formation for the first time in 3.5 years. In the shorter term, however, total weekly volume has fallen period-to-period as indecision continues to grip the market. Price action is caught between the 100-day and 200-day moving averages (MAs). The next major move either way is likely to determine trend bias going forward, if a firm close above or below those averages is confirmed.
Bitcoin (BTC) looks on track to produce a bullish long-term signal not seen in 3.5 years.
The 50-period and the 100-period MAs have edged closer together on the weekly chart after BTC rebounded from $7,293 to $10,350 on Oct. 26, according to Bitstamp data.
A cross of the 50-period MA moving up above the slower 100-period MA, known as a golden cross, generally hints at a strong shift in a trend and can act as confirmation of a bullish bias for the long-term view.
The last time that bull cross occurred on the weekly chart was way back in May 2016, when the price of BTC started rising from $438 to near $20,000 in December 2017 – a 4,800 percent increase. If the MA’s continue to converge as currently, the cross looks likely in late December or early 2020, but it’s still too early for a precise call. Weekly chart
There is inherent risk involved with making such comparisons from previous years, as market conditions have changed significantly. Yet there is merit for seeking additional confirmation in the long-term trend, since BTC’s miner reward halving in May 2020 is likely to stir up a bunch of market activity as the supply-cutting event approaches.
Total weekly volume has shrunk from two weeks ago, an indication of market indecision on a fairly stagnant price, while the RSI is barely trending bullish above 52.7 (neutral being 50).
However, should the two lines converge and then cross bullish, that would be a strong indication that the 2019 reversal rally has legs. With a strong fundamental event for BTC occurring right around the corner, it’s important to take note of the bullish signals on larger time frames.
More immediately, the daily chart suggests market equilibrium, as prices have been largely stuck within a $650 range for nearly two weeks. Daily chart
BTC’s price action has been caught between the 100-day and 200-day MAs for 12 days.
Generally speaking, when prices are above the 200-day MA, the long-term trend can be considered bullish. Conversely, if prices are beneath the 100-day MA then that is an indication of mid-term (30-60 day) bearish conditions.
The current scenario highlights the indecisive sentiment felt across the market. A repeated failure to close above the 100-day MA could open up doors to $8,800 in the immediate short-term, as previously discussed.
Indecision will continue until a firm close above $9,573 (100-day MA) or below $9,180 (200-day MA) occurs with conviction, until then, continued sideways ranging can be expected.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by TradingView