The weekly Moving Average Convergence Divergence (MACD) is turning downward, raising fears that Bitcoin may have a longer correction than expected.
Ignore “at your peril,” one noted trader tells his followers after noticing a downturn in the weekly MACD. Dave the wave (@davthewave) has charted the weekly MACD, which is “pointing to an extended period down.” Although, as he also mentions, many seem to see this metric as a “lagging indicator,” but it’s unclear whether this is the case this time.
A Perilous State for Bitcoin
With Bitcoin giving traders some breathing room around the $9500 price point today, the leading cryptocurrency may be primed for another leg down in the short-term. The declining weekly MACD is a damning indicator, but what is even scarier is the monthly MACD which is teetering on the edge.
Dave the wave has been predicting the monthly MACD to turn downward for months, expecting it to revisit the ‘zero line.’
If the monthly MACD does end up going negative, it could trigger an army of trading bots and likely result in a flurry of downward price pressure. Moreover, it would clearly indicate a return to a bear market at least until year’s end. For most bulls, such a reversal would come as a significant blow to their morale, and many would likely exit the market as a result.
The Bitcoin Halvening Approaches
Although Bitcoin traders have positive momentum going into 2020, weathering the storm until the new year will prove tenuous. With the halving set to occur in May of next year, we still have a long way to go—and this means that we could possibly see a short-term downtrend before the steady rise until the halving event. Historically, however, price increases have often come after halving events with only a slight rise expected before them. This will likely play out all the same in 2020 given that this rule has been true for all previous halving events.
However, given that the Bitcoin market likes to break the rules, there really is little to be sure of. Even the shockingly low volatility this month for Bitcoin caught many traders by surprise, but now it seems that bearish momentum is back on the table.
Do you believe a decline in the weekly MACD for Bitcoin is a cause for concern? Let us know your thoughts below.
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