Bitcoin (BTC) has performed well since the first spot Bitcoin was approved exchange-traded funds (ETFs) in the USA significantly worse than expected.
If this indicator holds out, more bad news could be in store for the market.
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Bitcoin and the Guppy Multiple Moving Average indicator
We are talking about the so-called Guppy Multiple Moving Average indicator. Developed by Australian Daryl Guppy, this indicator is based on several exponential moving averages (EMAs) or exponential moving averages.
These moving averages are divided into two categories, one for the short term and one for the long term. The short-term EMAs are usually colored green on the price chart and the long-term EMAs are colored red.
When the green line crosses the red, it is often a sign of a general uptrend that is accelerating. After all, the average price increase is faster in the short term than in the long term.
We saw a clear example of this in October 2023, around the time the market started moving and many prices rose sharply. Bitcoin was still around $28,000 and the green lines crossed the red lines. Bitcoin subsequently rose by 75% and reached a high of $49,000 shortly after the ETF approval.
The popular Bitcoin indicator is showing a downward trend
However, this indicator is now turning around, as can be seen from the chart by analyst Stefano Gianti. This means that the green lines are below the red lines again. This is considered a momentum shift bullish Unpleasant bearish.
First short signal on $BTC with Guppy moving averages after 100 days.#Online trade #TradingView #bitcoin #btc #BTCUSD pic.twitter.com/PPdP2ECIKb
— Stefano Gianti (@StefanoGianti) January 23, 2024
The indicator therefore suggests that we may be heading towards a downtrend in Bitcoin price.
The Guppy indicator is a popular analysis method among traders that is gaining attention in the crypto market. In 2020 and 2021, it also showed a bearish cross, which subsequently led to significant price declines. Therefore, it is understandable that this indicator is closely watched.
However, these indicators are not fortune tellers. It is also based on the averages of the historical trend, which means there is a time lag.
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