Bitcoin (BTC) shed a key bear market trendline last week as it shed nearly 12%, but other chart data offers a silver lining for bulls.
As written down by popular Twitter user Dave the wave on August 24th, long-term moving averages (MAs) are about to repeat classic bullish behavior.
Analyst: Bulls could ‘do well’
BTC/USD disappointed over the weekend as it posted lows not seen since late July. Since then, $21,000 has offered only weak support and there are many fears that new lows are to come.
One of the casualties of the downturn was the 200-week ma, data from Cointelegraph Markets Pro and TradingView shows, a level that flipped from resistance to support the month before.
The 200-week MA, which has returned overhead and unchallenged by rebounds this week, offers a verdict on Bitcoin’s current lack of strength.
“The amount of FOMO we’ve seen on CT over the past two weeks during the $25,000 rally is unprecedented. This bulltrap almost needs to be played out,” analyst Venturefounder summarized after the 200-week MA fails as support.
However, observing the behavior of the 50-week and 100-week MAs suggests that all may not be lost.
In his Twitter thread, Dave the wave showed that the former is about to cross over the latter – and historically this has been followed by sustained price growth.
“Bitcoin 1-year moving average is now crossing the 2-year moving average according to the correction phase after a speculative surge,” he wrote in accompanying comments.
“Looks good from a technical point of view … whatever the mood. Those who bought these tiers have previously done well.”
Annotated BTC/USD chart. Source: Dave the wave/ Twitter
He added that five months ago, the same pair of MAs correctly priced the market’s upcoming downtrend, which saw BTC/USD hit a macro bottom of $17,600 in June.
BTC/USD 1-week candlestick chart (Bitstamp) with 50, 100, 200 week MAs. Source: TradingView
Further down the Pi cycle
As Cointelegraph reported, there is more than one moving average-based chart mechanism signaling a bottom signal this summer.
Related: Here’s why holding $20.8K at this week’s $1B Bitcoin Options expiration will be key
The classic Pi Cycle top indicator, which has been making macro lows throughout Bitcoin’s history, turned green back in July, reinforcing the idea that June’s $17,600 was truly a multi-year bottom.
However, in an update on Pi this week, commentator Miles Johal acknowledged that bulls need to push higher levels to keep the status quo favorable.
Big expansion of the upper MAs of the Pi cycle.
Getting back above the orange line is crucial for the bulls.$BTC pic.twitter.com/REiSHrLSqG
— Miles J Creative (@JohalMiles) August 23, 2022
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.