Golden Cross Provides Glimmer of Hope for Bitcoin Price Revival

Omkar Godbole
Jul 30, 2019 at 10:00 UTC
Updated Jul 30, 2019 at 10:02 UTC
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  • Bitcoin’s three-day chart is reporting a golden cross, a long-term bull market indicator, for the first time since February 2016. A similar crossover seen six months ahead of the August 2016 mining reward halving paved way for a mega bull run.
  • History may repeat itself with mining reward halving due in less than 12 months.
  • BTC may rise back to $10,000 in the next 24 hours or so with short duration charts signaling seller exhaustion.
  • A UTC close above $11,120 is needed to revive the bullish view. On the downside, key support is seen at $9,049 (July 17 low).

Bitcoin’s (BTC) bulls have reason to be optimistic despite the recent 33 percent price drop, as a long-term technical indicator has turned bullish.

The 50-candle price average has crossed above the 200-candle average on the three-day chart, confirming a golden cross – a bull market indicator. That is the first such crossover on the three-day chart since Feb. 3, 2016, according to Bitstamp data.

That long-term moving average crossovers are lagging indicators and have limited predictive powers at best is widely known. So, seasoned traders may consider the latest cross as a product of BTC’s rally from December’s low of $3,122 to June’s high of $13,880. After all, MAs follow price and, the longer the time-frame of the MA, the bigger the lag.

Even so, the bulls can take heart from the golden cross, which has proved its mettle as a reliable indicator in the past, as discussed earlier this month.

Golden crosses 2016 and 2019

Bitcoin witnessed a golden cross in the three days to Feb. 3, 2016 – six months ahead of the mining reward halving – following which the cryptocurrency charted its way to a record high of $20,000 by December 2017.

With another reward halving (effectively, a supply cut) due in less than 12 months, history may just repeat itself.

As of writing , BTC is changing hands at $9,500 on Bitstamp, down 31.55 percent from June’s high of $13,880. The cryptocurrency could rise to $10,000 in the next 24 hours, according to the short-duration technical charts.

4-hour chart

The long-tailed doji seen on the 4-hour chart reflects the fact that sellers failed to keep prices at lows near $9,100 on July 28, with buyers pushing prices all the way back to $9,500.

The candle widely considered a sign of seller exhaustion, more so since it has appeared following a more than 30-percent decline from June’s high of $13,880.

 Daily chart

A bearish lower-highs pattern, as represented by the falling trendline, is intact. The 5- and 10-day moving averages (MAs) are also trending south.

The 14-day relative strength index is reporting bearish conditions with a below-50 print. The indicator, however, is now flatlining, indicating a weakening of bearish momentum.

More importantly, dips to or below $9,400 have been consistently short-lived since July 16, also a sign of seller exhaustion.

As a result, a rise back to $10,000 in the next 24 hours cannot be ruled out. That said, a bull revival would require a UTC close above the bearish lower high of $11,120 created on July 20.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.