The MACD histogram, a very popular #Bitcoin (BTC) technical analysis indicator, has the crypto crowd on Twitter worried. The MACD shows that an intense price decline is on the way.
According to technical analysis platform TradingView, the moving average convergence divergence (MACD) histogram for measuring trend strength and changes, Bitcoin broke below zero on the weekly price chart. This change represents a transition from bull to bear and is often considered a sell signal.
However, some technical analysts say the signal is weakened by other factors. Macroeconomic events such as the inflation rate to be announced today, US time, and the Central Bank decision to be announced on Wednesday are thought to affect Bitcoin price performance. Still, the signal follows BTC's 16 percent decline from highs around $31,000 recorded two months ago, raising questions about the sustainability of the bull revival witnessed earlier in the year.
Crypto trader @CryptoBullet1 says the MACD bear cross is similar to the one observed about four years ago, referring to those expecting a meteoric rally. At the time, the market was coming off an impressive rally like the last two months and crashed after the indicator recorded a decline.
“I think the most likely outcome is a drop to $19-20 thousand.” Another Twitter user writes, pointing out the transitions in April 2022, November 2021 and April 2021, drawing attention to MACD's record of being able to predict market fluctuations.
Support level remains intact
Katie Stockton, founder and managing partner of technical analysis platform Fairlead Strategies, states that she does not agree with these views.
Stockton says the following in the note he sent to his customers:
“The new MACD 'sell' signal is a potential pullback, but short-term oversold conditions are appropriate, while medium-term oversold conditions may also be reached. This means that Bitcoin may be given a chance at $25,200, a level close to support.”
Bitcoin continues to hold resistance-turned support at $25,200 due to regulatory uncertainty and panic selling in alternative cryptocurrencies. A bullish revival occurred when prices crossed the said level in March.
The weekly chart shows Bitcoin providing support at $25,200.
While oversold signals are unreliable as standalone indicators, they can indicate interest in buying if accompanied by prices trading at significant support, as in BTC's case.
