Bitcoin saw its largest daily red candle in its history yesterday, based on the total moving dollars. Today the sale resumed and the MACD went bearish for the first time since the leading cryptocurrency by market cap took out $ 20,000.
Is this a sign of a near-term reversal or is the top of the bull market already here? The moving average convergence divergence indicator says the following about recent crypto price movements.
Have Bitcoin Bears Regained Control of the Top Cryptocurrency?
Bitcoin started the year with its sharpest weekly advances yet, growing the asset from under $ 30,000 to over $ 40,000. The rounded number, which was more than double its previous high, was the first resistance for the asset since the $ 10,000 breakout.
The rally started and Bitcoin never returned – at least until now. Although cops have been in control for months, hidden bears attacked over $ 40,000, dropping the cryptocurrency by over $ 10,000.
Related reading | Bitcoin Bloodbath: How the Dollar Turned a Sea of Green-Red
Yesterday the record was set for the worst daily close in the asset’s short twelve-year history. The fallout could have changed the bull trend bearishly and brought fear back to the otherwise overly lush crypto market.
The sale has continued since then but the bulls are currently holding prices in check and the price is consolidating. However, the sell-off was enough to color the MACD red on the histogram in daily periods for the first time since $ 20,000 was taken out.
The daily MACD has turned red on the histogram for the first time since $20K | BTCUSD on TradingView.com
The short term trend becomes bearish but the weekly and monthly dynamics remain
The moving average convergence divergence indicator is a trend-following momentum meter that consists of two moving averages that converge and diverge. Because of how it works, it is often ignored by analysts as a “lagging” indicator.
Bitcoin’s MACD histogram, which is only now turning bearish after a sell-off of nearly $ 10,000, shows this lag, but it doesn’t affect its effectiveness. Crossings of the two MACD lines can serve as an acknowledgment signal that determines that the trend is changing.
Related reading | The Bitcoin upward trend of USD 20,000 has been lost, according to the parabolic indicator
And because the MACD is focused on dynamics and has gotten so high lately, the eventual correction will have more gravity. The histogram that turns red on the daily timeframe can stretch for days as long as the bulls cannot cross the two moving averages.
It is important to note, however, that as with any technical analysis indicator, higher time periods are weighted more heavily and the overall momentum is still up for weekly and monthly time periods that count the most.
To effectively use the MACD on the way back, confirmation that the daily bull trend has resumed would arrive with an upward transition in the moving averages.
Featured image from Deposit Photos, Charts from TradingView.com