The list of indicators signaling a long-term bullish reversal in bitcoin (BTC) continues to grow with each passing week.
The latest to join the list of a select few is the MACD histogram, which has moved above zero – turned bullish – for the first time since January.
The MACD histogram, which oscillates above and below the zero line, is one of the most popular technical indicators used to determine the trend reversal and momentum.
A bearish-to-bullish trend change is confirmed when the histogram moves above the zero line. On the other hand, a bearish reversal is confirmed when the histogram dips below zero.
The bullish turn of the MACD histogram adds credence to BTC’s strong defense of the psychological support of $6,000 in the last ten weeks.
Further, it validates bearish exhaustion indicated by BTC’s long-tailed monthly candle and the record low net shorts in the BTC futures market.
At press time, BTC is trading at $7,320 on Bitfinex, representing a 0.8 percent appreciation on a 24-hour basis.
BTC weekly chart
As seen in the chart above, the histogram has moved above the zero line for the first time since January. More importantly, the bullish turn in the MACD is accompanied by a falling channel breakout (bullish pattern).
So, it seems safe to say that the outlook as per the weekly chart has turned bullish. As a result, BTC could explore the upside towards the July highs above $8,500 in the next few weeks.
While the long-term picture is looking rosy, the cryptocurrency could drop to $7,000 (psychological support) in the next day or two, if the wedge pattern seen in the chart below ends with a downside break.
The rising trendline has been breached, so BTC could dip below the wedge support of $7,230 in the next few hours.
On the other hand, a high volume bullish breakout would signal a continuation of the rally from the August low of $5,859.
- A combination of the falling channel breakout and the bullish weekly MACD indicates scope for a rally to the July highs above $8,500.
- For the next 24 hours, the investors need to keep an eye on the pennant pattern seen in the 4-hour chart. A bullish breakout could yield a rally to $7,500, while a downside break would shift risk in favor of a drop to $7,000.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Author: Omkar Godbole