There is an ominous “death cross” maturing on the Bitcoin price chart and soon predicting a grim outlook for the cryptocurrency.
The benchmark cryptocurrency has fallen aggressively after hitting a record high near $ 41,986 (data from Coinbase) on Friday. At its most recent low it was trading at $ 30,100 but raised hopes of a bullish revival as traders bought the level and pushed prices above $ 35,000 as of Tuesday.
However, the mixing of Bitcoin’s short-term and long-term moving averages on a four-hour chart has set the alarm for a possible bearish continuation.
The cryptocurrency’s 20-period EMA, viewed as a short-term trend tracker, fell below its 50-period SMA, which is viewed as an indicator of slightly long-term price patterns. This led to the formation of the Death Cross, a pattern traders view as a signal to increase their short exposure to the market.
Bitcoin forms the death cross pattern on the 4H card. Source: BTCUSD on TradingView.com
Bitcoin forms the Death Cross pattern on the 4H chart. Source: BTCUSD on TradingView.com
The point where the two waves of the moving average converge in the table above to keep Bitcoin from prolonging its rebound is moving higher. This demonstrated a strong technical confluence of two resistance levels, increasing the potential of BTC / USD as it tried to break below it.
One reason for this was a wobbling US dollar.
The greenback rebounded sharply from its two-year low over the past six days, pushing down an inversely correlated Bitcoin. On Tuesday morning, the US dollar index reduced a small portion of its gains and raised BTC / USD. As the US session approached, the trend showed signs of reversal and resumed sell-off pressures in the Bitcoin market.
The US dollar index is revised slightly after examining its historical resistance area. Source: DXY on TradingView.com
US Dollar Index undergoes modest correction after testing its historical resistance range. Source: DXY on TradingView.com
Overall, a confluence of dollar and death cross MA resistances prevented Bitcoin from expanding its retracement.
Dissent Bitcoin Bears
However, investors expected the dollar to resume its downtrend on the prospect of additional stimulus from the future Joe Biden administration in the US. More greenback liquidity has helped Bitcoin climb from just $ 3,858 to a record high of over $ 41,000 in just nine months of trading.
“This is a big fake Biden’s Covid / Stimulus plan,” said Jason A Williams, an independent market analyst and author.
“HODL. Zoom out. Bitcoin is still available, ”he added.