Bitcoin has been through a tough week. After failing to breach the strong resistance at $11,500 on March 5, Bitcoin plummeted back to the $7,300 level last March 18. As of the time of writing, Bitcoin managed to bounce back and is currently trading at the $8,500 level.
50-Day Moving Average vs. 200-Day Moving Average
Moving averages indicate important trading signals, especially when two averages cross over. A comparison of the 50-Day Moving Average and the 200-Day Moving Average for Bitcoin’s price action shows a crucial crossing. Downward momentum is confirmed with a bearish crossover, which occurs when a short-term moving average crosses below a longer-term moving average. Looking at the charts at the moment reveals a possible crossing of the 50-Day MA below the 200-Day MA.
Looking at the bigger picture, however, this crossover has evidently already happened before. Looking at the 2015 Bitcoin chart, we see that on September 14, a bearish crossover happened. The downward momentum continued for about 12 days, until a bullish crossover happened on September 26, which propelled Bitcoin prices to new all-time highs. Historical data suggests that there is strong possibility for a bull run to happen, if the market gains more buying sentiments.
Here is where the Stochastic RSI comes in. According to the Stochastic RSI, Bitcoin is being oversold at the moment, and the current price action is a good entry point.
If the buying sentiment continues, we may see further recovery in Bitcoin prices in the coming days. However, as the 50-Day MA crosses below the 200-Day MA, more sideways trading may happen. At the point of crossing, we may even see another test of the $7,300 support level.
On the one-year chart, we still see very strong resistance at the $11,500 level. This means that even after the crucial crossover happens, the resulting bull run may see ceiling at the $11,500 level.
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