Imminent Bearish Signal from Key Bitcoin Indicator Seen in 2023 Rally

• Technical Analysis Indicator Signals a Bearish Trend for Bitcoin
• Guppy Multiple Moving Average Indicator: An Overview
• Understanding Trend Changes
• Bearish Crossover in Sight
• Bitcoin's Current and Past Performance
• Past Trends and Predictions

Technical Analysis Indicator Signals a Bearish Trend for Bitcoin

A technical analysis tool that turned bullish in mid-October, triggering an impressive bitcoin price surge of 70%, is on the brink of displaying a bearish signal to trend-following traders. This tool is known as the Guppy Multiple Moving Average indicator, a creation of Australian trader Daryl Guppy. It classifies several exponential moving averages (EMAs) into two primary categories: short and long-term. The purpose of this division is to assist traders in identifying trend changes and confidently trading in a trending market.

Guppy Multiple Moving Average Indicator: An Overview

The short-term band of the Guppy Multiple Moving Average indicator is depicted by green lines, incorporating 3-, 5-, 8-, 10-, 12-, and 15-day EMAs. In contrast, the long-term band, designated by the red color, includes 30-, 35-, 40-, 45-, 50-, and 60-day EMAs.

Understanding Trend Changes

When the green band crosses above the red band, a bearish-to-bullish trend change is indicated. Conversely, a green band crossing below the red band signals a bearish shift in momentum. Most traders, being trend-following individuals, favor entering at the time of the crossover and holding in the direction of the long-term trend.

Bearish Crossover in Sight

As of the current moment, the Guppy Multiple Moving Average indicator appears poised to display a bearish crossover, as the green band is on the verge of moving below the red band. Essentially, the indicator is signaling an increase in bearish momentum.

Bitcoin's Current and Past Performance

Bitcoin$42,260 -0.64% has been trading significantly below the red band, with its price standing at $39,200 on major exchanges. When the green band crossed over the red band in mid-October, with Bitcoin trading near $28,000, it signaled a bullish trend in the offing. The cryptocurrency saw a steady rally in the following weeks, consistently trading above the red band and reaching a peak of nearly $49,000 on January 11th.

Past Trends and Predictions

Historically, bull crosses in mid-January and mid-March 2023 led to sustained bullish trends. Likewise, bear crosses in December 2021 and April 2020 led to extended periods of market downturns. Given the current indicators, traders might anticipate a similar bearish trend on the horizon.

Edited by Jonathan Stoker