Bitcoin’s Chart Patterns Hint at Potential for Bullish Movement
Bitcoin (BTC) traders might want to closely observe recent chart patterns, as they appear to resemble those observed just before the surge from $70,000 to $109,000 in late 2024.
A significant indicator in this pattern is the Moving Average Convergence Divergence (MACD) histogram on the weekly chart. The MACD is a momentum indicator used to detect shifts in market trends. Crossovers above or below the zero line typically signal bullish or bearish momentum, respectively. However, these signals need to be assessed in conjunction with price action. For instance, a bearish crossover may not lead to a downtrend unless it is followed by consistent price declines. Without that, it could signal a bear trap, as seen in the current BTC chart.
Bitcoin’s recent price action supports this interpretation. In mid-February, when the MACD turned negative, BTC initially dropped in price. However, the cryptocurrency found support at the 50-week simple moving average (SMA) in March and quickly rebounded above $90K, even as the MACD stayed below zero. This setup mirrors what occurred last year in August and September, when Bitcoin held its ground above the SMA despite negative MACD signals. By mid-October, the MACD turned bullish, confirming the trend and sparking a rally from $70K to $100K by December.
Another key chart pattern involves the 50-day and 200-day SMAs. Approximately four weeks ago, the two SMAs formed a bearish crossover, or “death cross,” indicating the possibility of a long-term downtrend. However, Bitcoin found support around $75K, and the trend reversed. Recently, the 50-day SMA has been rising, and it could soon cross above the 200-day SMA, potentially setting up a golden cross, which is often considered a bullish signal.
This pattern closely mirrors the trend from last year, when the death cross in August marked a market bottom. The golden cross that followed initiated a breakout above $70K, which eventually led to Bitcoin’s rally past $109K.
In conclusion, these chart patterns suggest Bitcoin could be heading toward a bullish breakout, potentially pushing prices above the January high of $109K.
However, while these chart patterns can provide useful insights, it’s important to note that technical analysis is not always foolproof. Unexpected macroeconomic events and shifts in market sentiment can drastically alter market conditions, making chart-based predictions subject to change.
