Well known Twitter investor and cryptocurrency enthusiast @Willywoo brought to attention an interesting development regarding the price of Bitcoin.
The relationship between price and moving average (MA) can help forecast future price movement. Let’s take a look at this particular MA and see how the price has historically reacted to it.Kissing the 128d MA is a very good sign. It was overheated till this. People familiar with BTC’s historic personality know that the 128d line needs to be touched many times during a bull market to stay grounded. They present good buying opportunities. pic.twitter.com/1QBo3QjtgD
— Willy Woo (@woonomic) August 29, 2019
Downtrend
- February (twice)
- April
- May
- July
- August
- October
The MA was falsely breached five times before the price again dropped below it.
The last two times, the price respected it as resistance, before breaking out in March 2019.
Therefore, during the recent downtrend, the MA was not a good predictor of price movement, since it was breached five times, yet a bull run did not begin.
We cannot say with certainty that as long as BTC is below its 128-day MA, it is in a downtrend.
Uptrend
- 2016 (January, February, August, September (twice,) October)
- 2017 (January, March (twice,) July, September)
- 2018 (January, February)
While the MA was breached by a wick several times, BTC bounced upward every single time.
The relatively big sample size for 2+ years signifies that the 128-day MA is a good predictor of price movement during an uptrend.
Therefore, as long as the price is above it, we can say it is in an uptrend.
Will the price bounce at the current time and continue its uptrend? According to @Willywoo, it is worth exploring the possibility.
Do you think BTC will bounce on the MA? Let us know in the comments below.
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Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile. Images are courtesy of Shutterstock, TradingView, Twitter.
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