Bitcoin Chart Patterns Point to Potential Bullish Momentum Ahead
Crypto traders should pay attention to recent chart patterns for Bitcoin (BTC), as they appear to mirror those seen before the significant rally from $70,000 to $109,000 in late 2024.
The first pattern involves the Moving Average Convergence Divergence (MACD) histogram on the weekly chart, a tool commonly used to track momentum shifts and trend reversals. A crossover of the MACD above or below the zero line typically signals a change in market direction. However, these crossovers need to be assessed in context with price movements. For example, a bearish crossover can be invalidated if prices don’t follow through with declines, potentially indicating a “bear trap.”
Currently, BTC’s price action reflects this scenario. The cryptocurrency dropped when the MACD flipped negative in mid-February, but it quickly found support at the 50-week simple moving average (SMA) in March. Since then, BTC has rebounded above $90K, with the MACD remaining below zero, which is similar to the pattern observed last August and September. Back then, despite bearish MACD signals, the price held above the SMA and eventually reversed as the MACD flipped bullish in mid-October, triggering a rally from $70K to $100K by December.
The second pattern centers around the 50- and 200-day SMAs, which recently formed a bearish crossover, or “death cross,” suggesting a possible long-term downtrend. However, this cross turned out to be a bear trap, with Bitcoin finding support near $75K before reversing direction. In the past few weeks, the 50-day SMA has started to rise and could soon cross above the 200-day SMA, setting up a potential bullish golden cross.
This pattern mirrors the trend from last year, where the death cross in August marked a market bottom, followed by a golden cross that initiated a breakout above $70K and led to a rally that pushed Bitcoin above $109K.
In conclusion, these chart patterns suggest that Bitcoin could see increased bullish volatility in the near future, potentially pushing prices past the January high of $109K.
While chart patterns provide valuable insights into market trends, it’s essential to keep in mind that historical patterns are not always predictive. Macroeconomic events and external factors can rapidly shift market sentiment, making technical analysis only one piece of the puzzle.
