Yahoo Finance Bitcoin Price Faces Bear Indicator Not Seen Since 2014
Following bitcoin's recent losses, a key long-term trend indicator is looking increasingly bearish.
Notably, the five-month moving average (MA) has rolled over in favor of the bears and looks set to cut the 10-month MA from above â a bearish crossover that hasn't been seen since June 2014.
If that occurs it could be a worrying signal for the long-term price outlook. Back then, following an identical crossover in June 2014, the cryptocurrency subsequently dropped by 70 percent (from $580 to $166) in the seven months leading up to January 2015.
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This time around, the bearish crossover will likely occur at the turn of the month, if bitcoin extends the current decline towards the $7,000 mark, and would open the doors for a deeper sell-off towards the $5,000 mark.
Monthly chart
Currently, the five-month MA is seen at $8,916 and the 10-month MA is located at $8,379, according to Bitfinex data. Meanwhile, bitcoin is changing hands at $7,820 â down almost 5 percent in the last 24 hours.
Daily chart
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The observed lower-highs and lower-lows pattern (marked by circles) and the downward sloping 5-day and 10-day MAs indicate a bearish setup. The chart also shows a bearish crossover between the 10-day and 50-day MAs.
Further, the relative strength index (RSI) is below 50.00 (in the bearish territory), but holding well above 30.00 (oversold territory), indicating enough room for a sell-off towards $7,000.
Weekly chart
Acceptance below the 50-week MA, currently seen at $7,620, would only bolster the already bearish daily chart technicals and increase the odds of the bearish five-month/10-month MA crossover.
The 50-week MA worked as a strong support in April, so a break below that level could yield a sharp sell-off.
View
BTC risks deeper pullback towards $7,000. In such a case, the 5-month MA will cross the 10-month MA from above, signaling a bearish crossover and opening doors for a drop to $5,000.
Bullish scenario: A solid rebound from the 50-week MA at $7,620 and a convincing break above $8,644 would signal a bullish reversal.
Down arrow image via Shutterstock
