Bitcoin's 'Guppy' Indicator Flashes Green for Bulls

While technical studies are aligned bullish, Friday's U.S. jobs report could play spoilsport.

AccessTimeIconApr 1, 2022 at 10:53 a.m. UTC
Updated May 11, 2023 at 4:45 p.m. UTC

Bitcoin's two-month rally may have legs, with a historically reliable indicator flashing a green signal to trend-following traders.

The guppy multiple moving averages (GMMA) indicator, which combines two groups of moving averages (MAs) with different periods to analyze market behavior on multiple time frames, has produced a bullish crossover on the daily chart for the first time this year.

Developed by Australian trader Daryl Guppy, the indicator is used to identify reversals and trend strength by analyzing an asset's momentum in a particular direction. A bullish cross occurs when the green band representing short-term moving averages crosses above the red band of long-term moving averages and indicates the upward momentum is gathering pace.

"In the last 7 days, the GMMA has finally confirmed a full bullish crossover," research boutique Delphi Digital analysts said in a market insight published early Friday. "The previous occurrences of crossover signal triggered were the 2021 summer lows, and the April 2021 market high, with both leading to multi-month trend reversals."

Bitcoin's daily chart with the Guppy indicator
Bitcoin's daily chart with the Guppy indicator

Bitcoin's recovery rally from the July 20 low near $30,000 gathered pace after the indicator, known as the Guppy, flipped bullish later that month. The cryptocurrency rallied nearly 15% last August, hitting highs above $50,000. Guppy flipped bearish just before the mid-May crash and the early December crash.

While past performance is no guarantee of future results, seasonality analysis supports the case for the latest bullish signal paving the way for more substantial gains in the coming weeks.

The 200-day moving average defines the immediate resistance seen at $48,300. Early this week, the bulls failed to force a breakout above that widely tracked technical line. Since then, the price has pulled back to $45,000, perhaps tracking weakness in equity markets. The S&P 500, Wall Street's benchmark index, fell 1.5% on Thursday.

On the downside, Guppy's red band of long-term moving averages could offer support. "If BTC begins to lose momentum after this rally, look for the long-term MA grouping (red) to act as support should price retest this area," Delphi's analysts said.

That support may come into play if the U.S. non-farm payrolls figure for March, scheduled for release at 12:30 UTC, beats the estimated job growth of 490,000.

"A big beat on expectations would contribute to higher inflation and could see asset prices decline," David Belle, founder of and U.K. growth director at TradingView, told CoinDesk in a Twitter chat.

According to economic theory, the relationship between inflation rates and unemployment rates is inverse. The Federal Reserve's preferred inflation gauge rose 6.4% in February, the highest since 1982, meaning the central bank will probably continue to tighten the money supply and raise rates.

A greater-than-expected payrolls figure would strengthen the case for faster liquidity withdrawal by the Fed. "The idea of an inter-meeting rate hike isn't necessarily off the cards," Belle said. The central bank raised rates by 25 basis points last month while signaling a continued fight against inflation.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.