Bitcoin could see an upward movement in the coming weeks, thanks to two major daily moving averages heading for a collision dubbed a golden cross.
Crossover occurs when a short-term moving average (MA) exceeds a longer-term average, typically the 50-day and 200-day MA, alluding to strong upward momentum in asset prices.
The last time such an instance occurred was in April 2019, when the price of BTC rose 175% to create an annual high of around $ 13,880 after a temporary decline to $ 4,995, according to Bitstamp data. .
Therefore, if history repeats itself, the BTC could experience a short-term drop before heading to a new high for 2020.
The convergence of the two key MAs indicates strong buying pressure, with the BTC continuing to post positive gains since the start of the year. Bitcoin is up 43.5% since January 1 and 175% year-on-year compared to February 14, 2019, or almost $ 3,560.
However, the golden cross will need sustained positive follow-up or the chances of a deeper withdrawal may increase.
Supporting the potential for short-term losses, the 14-day Relative Resistance Index (RSI) – an indicator used to judge the dynamics of a given trend – currently indicates near-overbought conditions with a reading of 67, 2. A value of 70 and above represents an overbought, while 30 and less indicates an asset being oversold.
In addition, yesterday’s bearish engulfing candle opened the doors for another $ 10,000 test. The temporary withdrawal could be extended if prices fell below $ 10,000 psychological resistance, exposing $ 9,867, a region of former hourly resistance.
Overall, the price action has shown an upward trend, as evidenced by a weekly price break on January 20 from the downward channel of almost 7 months, starting at the end of July.
The 50-period AM on the weekly chart (yellow line) signaled bullish momentum when prices stayed above – as in 2017 and the first quarter of 2018. Prices remained bearish below throughout the second 2018 semester and throughout 2019, which indicates lower buyer demand.
Prices remain well above 50 MA, hinting at greater purchasing power before the bullish “halving” event planned for May 2020, a reduction in the supply programmed in the bitcoin code which sees miners’ rewards reduced by 50%.
The medium-term bullish view would be compromised if prices fell below $ 9,706, the level of a big bullish candle engulfing on February 11.
Disclosure: Author has no cryptocurrency at time of writing
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