The fall in Bitcoin (BTC) last week, where Bitcoin fell from $ 47,358 to $ 43,178, triggered fears of a prolonged sell-off.
Independent market analyst Nonya Biznes has highlighted a bearish fractal on weekly Bitcoin charts compared to the 21-week exponential moving average (EMA).
In detail, the cryptocurrency closed below the aforementioned support area 18 times, but kept the previous bullish slope only four times of all – as shown by the dotted vertical lines in the chart below.
BTC / USD daily price chart showing a moving average of 21 weeks. Source: Nunya Business, TradingView.com.
Otherwise, a proximity below the 21-week moving average resulted in a significant drop in bitcoin prices, with the exception of an imaginary bearish breakout in August 2015, which quickly led to a “massive rally”, the analyst noted.
Similarly, Bitcoin’s recent break during the wave in May 2021 fell to $ 30,000 for the first time since January 2021. However, the cross did not result in a complete bearish fall; Traders bought a drop of about $ 30k and increased prices above $ 50k.
But overall, the phenomenon causes the Bitcoin price to break below the 21-week exponential moving average long sales about 78% of the time.
Bitcoin bounces below the 21-week moving average again
Bitcoin closed the week ending September 26 with $ 43,178, warning of its 19th historic fall below the exponential moving average of 21 weeks, which was around $ 43,502 at the end of the week.
Although fractals show a bearish result, on closer examination of the relationship between the 21-week moving average and the 50-week simple moving average (SMA) shown in the chart below, you should note that the potential bearish outlook requires further testing. Health.
This is mainly due to the immediate reaction of the traders to the two moving averages, especially when the 20-week exponential moving average (green wave) closes below the 50-week simple moving average (blue wave). The former so-called Death Cross Index coincided with a further decline in the bitcoin market.
The weekly bitcoin price chart shows a death cross of 20-50-MA. Source: TradingView.com
For example, the BTC / USD fell below the 21-week moving average (around $ 8,081) in the week ending January 29, 2018, but maintained a bullish slope until the green wave closed below the blue wave. Then the pair bottomed out around the 200-week simple moving average (around $ 3187).
Similarly, the 20-50 MA death cross in March 2020 came just a week before the infamous sale of COVID-19 caused by the global market crash caused by COVID-19. Once again, Bitcoin closed close to its 200-week SMA (~ $ 5,512) only to return to new highs in subsequent sessions.
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Thus, it seems that the end use of bitcoins between 20-week SMA and 50-week SMA could trigger the next sales crisis with the ultimate goal of a decline close to 200-week SMA (around 16,000 dollars). ).
Meanwhile, Fibonacci retracement levels of around $ 34,712 and $ 27,580 could prevent bitcoin prices from reaching the 200-week simple moving average.