Independent market analyst Nunya Bizniz highlight A bearish fractal on Bitcoin’s weekly chart regarding its 21-week exponential moving average (EMA).
In detail, the cryptocurrency has so far closed below the above-mentioned support zone 18 times, but only 4 of them have retained the previous bullish bias-as shown by the vertical dashed line in the figure below.
In the remaining cases, closing prices below the 21-week EMA resulted in extremely low Bitcoin prices, unless there was a false bearish breakout in August 2015, which soon resulted in a “huge bull market”, as analysts pointed out.
Similarly, Bitcoin recently broke the wave in May 2021, which also caused the price to fall below $30,000 for the first time since January 2021.However, this crossover did not lead to Full-scale bearish collapse; Traders bought on dips near 30,000 USD and brought the price back to above 50,000 USD.
But overall, the phenomenon of Bitcoin prices falling below the 21-week moving average has led to a long-term sell-off of nearly 78%.
Bitcoin once again fell below the 21-week moving average
Bitcoin closed at $43,178 in the week ending September 26, reminding it of its 19th historical decline below the 21-week moving average-weekly closing price of approximately $43,502.
Although the fractal anticipates the downside results, a closer look at the relationship between the 21-week EMA and the 50-week simple moving average (SMA)-as shown in the chart below-notices that the potential bearish outlook needs further verification.
This is mainly due to the direct reaction of traders to the two moving averages, especially when the 20-week EMA (green wave) closes below the 50-week SMA (blue wave).So-called Death cross This indicator previously coincided with a further decline in the Bitcoin market.
For example, in the week ending January 29, 2018, the BTC/USD exchange rate fell below its 21-week moving average (approximately US$8,041), but maintained an upward trend until the green wave closed below the blue wave. Later, the currency pair bottomed near its 200-week moving average (close to $3,187).
Similarly, the 20-50 MA death crossover in March 2020 is only The notorious Covid-19 sell-off, The global market crash led by Covid-19. Similarly, Bitcoin finally closed near its 200-week moving average (approximately $5,512), and then rebounded to a new record high in a few trading days.
Therefore, Bitcoin’s potential death cross between its 20-week moving average and its 50-week moving average seems likely to trigger the next selling crisis, with the final downside target located near the 200-week moving average (approximately $16,000).
At the same time, the Fibonacci retracement levels close to US$34,712 and US$27,580 may prevent Bitcoin prices from approaching the 200-week moving average.
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