Resurgent Bitcoin Will Likely Shrug off Long-Term Bear Cross

Tuesday 10 January 2020, 10:45 PM AEST - 5 months ago

  • Bitcoin's short-term technical charts indicate scope for a test of the 200-day average at $9,100.
  • A breakout on a longer duration chart has opened the doors for a rise to $10,000 and above.
  • An impending long-term bearish crossover on the three-day chart is a lagging indicator and is of little concern.
  • The short-term bullish case would weaken if prices print a UTC close below $9,200.

Bitcoin is better bid at press time and could maintain its recent upward trajectory despite a long-term bearish indicator making its first appearance in 19 months.

The top cryptocurrency rose to a two-month high of $8,580 during Tuesday's Asian trading hours and is currently trading at $8,480 indicating a 4.8 percent rise on a 24-hour basis, according to CoinDesk's Bitcoin Price Index.

Bitcoin is now up by more than 30 percent from the low of $6,425 reached in December 2019.

While the cryptocurrency is showing signs of life following the gloomy second half of 2019, a widely-tracked technical indicator is about to flash a bearish signal.

The 50-candle average on the three-day chart is trending south and looks set to cross below the 100-candle average in the next few days. That would be the first bearish crossover of the two averages since June 2018.

However, moving averages are based on historical data and tend to lag prices. To put it another way, crossovers are the result of the price action that has already happened and have limited predictive powers.

While bitcoin did drop in the days leading up to and after the confirmation of the same bear cross in June 2018, the broader market conditions were bearish at the time, as seen below.

The 50- and 100-candle MAs produced a bear cross in the three days to June 21, 2018 (above left). Prices had fallen from $7,800 to $6,300 in the first two weeks of June and dropped further to lows below $5,800 by the end of the month.

A subsequent rise ended up creating a bearish lower high at $8,500 and prices remained ...

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