The three months of Bitcoin side trading may soon end with a notable price drop, as the key indicator reports a stronger bearish bias in nine months.
The leading cryptocurrency star rally since the April low of $ 4,000 sold out to highs above $ 13,880 at the end of June. Since then, BTC has produced a series of lower highs well above $ 11,000 and higher lows in the range of $ 9,000 to $ 10,000.
With a halving of the reward (supply cut) next year, many investors expect the consolidation in progress to end with a bullish break. The cryptocurrency is also expected to receive a boost from Bakkt’s launch of physically established bitcoin futures
However, the weekly MACD histogram, an indicator used to identify trend changes and the momentum of the bearish or bullish movement, is calling for a breakdown of the range.
The histogram crossed below zero in August, confirming a change from upward to downward trend and is now seen at -206, the lowest level since the last week of December 2018, as seen in the chart below.
The bearish bias is currently the strongest in nine months, according to the MACD.
Technical analysts would argue that MACD is based on moving averages and tends to delay the price. While that is true, the indicator has produced reliable signs of trend reversal in the past.
For example, the indicator crossed above zero in February, indicating a bullish reversal and the cryptocurrency entered a bull market with a high volume movement at $ 5,000 in the first week of April.
In another example, the MACD crossed below zero and fell to -8.18 in the second week of November 2018, after which prices fell sharply below $ 5,000.
In addition, other indicators are aligning in favor of bears. In particular, the Chaikin money flow index, which incorporates prices and volumes, is currently at 0.08, the lowest level since April 8, which means that the buying pressure is the weakest in 5.5 months.
BTC created a bullish hammer last Thursday, but so far, that has failed to attract offers. In fact, the follow-up has been bearish: prices have currently dropped more than $ 400 from the maximum of the $ 10,480 hammer candle.
Here too, the MACD has crossed below zero and the 14-day relative strength index reports bearish conditions with an impression below 50.
BTC, therefore, runs the risk of falling into the support of the hiring triangle, currently at $ 9,482. A UTC closing below that level could generate a settlement at levels below $ 9,000.
Meanwhile, a high volume closure above the upper edge, currently at $ 10,758 would imply a resumption of the bull market and open the doors for $ 12,000.
At the time of writing, BTC is changing hands around $ 9,920 in Bitstamp.