This is a daily technical analysis by our analyst and Chartered Market Technician, Omkar Godbole. Crypto bears should keep a close eye on bitcoin’s recent chart patterns, which resemble those that...
This is a daily technical analysis by our analyst and Chartered Market Technician, Omkar Godbole.
Crypto bears should keep a close eye on bitcoin’s recent chart patterns, which resemble those that preceded the late 2024 rally from $70,000 to $109,000.
The first pattern to watch is the weekly chart’s Moving Average Convergence Divergence (MACD) histogram, which is used to identify trend changes and reversals. MACD crossovers above or below the zero line typically signal bullish or bearish shifts in momentum.
Traders should interpret these signals in context with price action. For example, a bearish crossover should be confirmed by weakening prices; otherwise, it could be a bear trap indicating underlying strength. Currently, BTC seems to be in this scenario.
The cryptocurrency initially dropped after the MACD turned negative in mid-February, but it quickly found support at the 50-week simple moving average (SMA) in March and has since bounced back above $90,000. Throughout this period, the MACD has remained below zero.
This pattern resembles last August and September when prices held the SMA support despite persistent bearish MACD signals. The indicator turned bullish around mid-October, confirming the trend and leading to a rally from $70,000 to $100,000 by December.
The second pattern to note involves the 50- and 200-day SMAs. About four weeks ago, these averages formed a bearish crossover known as the death cross, indicating a potential long-term downtrend. However, this turned out to be a bear trap as bitcoin found support around $75,000 and changed direction.
Recently, the 50-day SMA has started to rise and could soon cross above the 200-day SMA, potentially setting up a bullish golden cross in the coming weeks.
This pattern closely resembles last year’s trend: the death cross in August marked a bottom, quickly followed by a golden cross that triggered a breakout above $70,000 and eventually led to a rally above $109,000 to new highs.
In summary, bullish volatility may be on the horizon, possibly propelling bitcoin well beyond the January high of $109,000.
While chart patterns are commonly used to evaluate market strength and predict future movements, it’s essential to remember that history does not always repeat itself, and macroeconomic factors can quickly change market directions, making chart analysis less than foolproof.
