Bitcoin’s Momentum Shifts: A Bullish Signal Emerges
A significant shift in momentum has taken place in the world of bitcoin, as a widely-tracked indicator has flipped bullish for the first time since April. This development is reminiscent of similar flips that occurred at the onset of the late 2023 rally and in late 2022, marking the end of a brutal downtrend.
Understanding the MACD Histogram
The moving average convergence divergence (MACD) histogram, a technical analysis tool used to gauge trend strength and changes, has turned positive on the weekly chart. This signals a renewed upward shift in momentum, implying a bullish resolution to bitcoin’s prolonged back-and-forth trading between $50,000 and $70,000. The MACD is calculated by subtracting bitcoin’s average price level during the past 26 periods from the average over the past 12 weeks.
A Positive Technical Outlook
The positive technical outlook is consistent with the consensus that a combination of factors will power bitcoin to at least $100,000 by the end of December. These factors include the Fed’s renewed bias for rate cuts, the growing probability of a pro-crypto Republican candidate winning the U.S. election, and weakness in the anti-risk Japanese yen.
A History of Bullish Signals
A similar MACD bull cross happened in October last year as bitcoin moved past the long-held $30,000 resistance, eventually reaching a record high of over $73,000 in March this year. The bull cross seen in late 2022 marked the bear market bottom. Bitcoin has risen nearly 30% since hitting lows under $53,000 in early September, with the leading cryptocurrency by market value reaching $69,500 during Monday’s Asian trading hours.
Establishing a Foothold Above $70,000
The MACD’s latest bullish signal follows a similar flash from the “line break chart” last week and suggests that bulls might finally succeed in establishing a foothold above the $70,000 mark, having failed to do so several times since the first quarter. With the positive technical outlook and favorable market conditions, bitcoin’s momentum shift could be the start of a significant move upwards.
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