- The 50-day moving average of bitcoin’s price could soon move above the 100-day moving average, confirming the first bullish crossover in seven months.
- While the bullish crossover is a lagging indicator, the slope of the MAs does confirm bearish exhaustion. So, bitcoin could rise toward $4,236 (Dec. 24 high) in the near future, as suggested by other longer duration indicators and the bullish candle created on Feb. 27.
- The bullish case would weaken if prices find acceptance below $3,658 (Feb. 27 low).
A widely-followed bitcoin (BTC) price indicator is about to turn bullish for the first time in seven months.
The 50-day moving average (MA) of bitcoin’s price, currently located at $3,669 could soon move above the 100-day MA at $3,670, confirming a bullish crossover – the first since the end of August 2018 – according to Bitstamp data.
The MA studies are based on past data. So, the longer the duration of the MAs involved in the bullish crossover, the bigger the lag and lesser are its predictive qualities.
Put simply, the latest bullish crossover of the 50- and 100-day MAs is more a product of bitcoin’s recovery rally from lows near $3,100 seen in December.
That said, with several key indicators like the weekly moving average convergence divergence and the money flow index reporting early signs of bullish reversal, the probability of the bull cross of the 50- and 100-day trapping the bulls on the wrong side of the market appears low.
As of writing, BTC is changing hands at $3,860, having clocked a low of $3,791 earlier today.
As seen above, the 50-day MA is about to cross the 100-day MA from below.
Notably, the former is beginning to curl upwards in favor of the bulls, while the latter is now flat-lined, as opposed to the bearish slope seen two weeks ago.
Further, BTC repeated defense of the 100-day MA seen over the last 12 days has strengthened the bullish case put forward by the long-tailed doji candle created on Feb. 27.
BTC could rise toward the inverse head-and-shoulders neckline resistance, currently located just below the bearish lower high of $4,236 made on Dec. 24.
A UTC close higher would confirm a bearish-to-bullish trend change and could yield a rally to $5,000.
On the weekly chart, the 5- and 10-candle MAs produced a bullish crossover two weeks ago. Further, BTC defended the 10-candle MA in the previous two weeks, reinforcing the bullish reversal signaled by the MA studies.
So, BTC is more likely to challenge the recent high of $4,190 in the near-term.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View