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After months of brutal downtrend, it seems that bulls are returning to the Bitcoin (BTC) market. Since the leading cryptocurrency hit $6,400 earlier this month, bulls have taken control of the asset, pushing it from those multi-month lows to as high as $7,700 just this morning prior to a 4% drop.
Related Reading: CME Futures Data: Institutions Still Wary Despite Bitcoin’s Bullish Signs
While some argue that it is too early to tell whether or not the macro trend is turning bullish, a key signal just flashed. The signal, a bullish divergence that preceded some of the biggest bull moves of the past 24 months.
Key Bitcoin Signal Flashes, Implies Impending Bullish Action
Last week was decidedly positive for Bitcoin. After days and days of a bearish downtrend, the cryptocurrency ended the week positive, pushing higher as the plunge protection team stepped in.
According to Scott “The Wolf of All Streets” Melker, BTC’s performance last week has created a very important signal on the weekly chart: a “massive bullish divergence in oversold territory on Stochastic Relative Strength Index.” For those unaware, the divergence Melker has pointed out is the fact that the Stochastic RSI is trending higher while the price is putting in lower lows.
Per the trader, this is the fourth time this signal has been seen since the $20,000 top seen in late-2017. The first preceded a bear market rally from $6,400 to $9,900 in mid-2018, the second preceded the 330% jump in the Bitcoin price seen from December 2018 to June 2019, and the third predicted the move from $7,400 and $10,400 that took place just weeks ago.
$XBT Weekly
(1) The weekly XBT chart confirmed the massive bullish divergence in oversold territory on Stochastic RSI. This is the fourth time that this has happened since the Bitcoin top. The first moved price from $6,400 to $9,900… pic.twitter.com/VpHArXdGzr
— The Wolf Of All Streets (@scottmelker) December 23, 2019
Considering the historical bullish significance of this signal, there’s a high likelihood that BTC could begin to gain bullish momentum on a medium-term time frame in the coming weeks.
Relate Reading: XRP is Down 95% from Its 2018 Peak; What’s Next for the Embattled Crypto?
And it isn’t only this divergence that it signaling such sentiment.
According to prominent cryptocurrency chartist Dave the Wave, Bitcoin’s one-week Moving Average Convergence Divergence (MACD) — the MACD is a lagging trend indicator used by many technical analysts — is likely going to see a crossover early next year after trending lower for the next two months:
“Weekly MACD shaping up to re-cross bullishly soon to confirm the continuation of the next cycle,” the popular trader wrote.
Bullish MACD readings on Bitcoin’s one-week chart marked the start of previous bull runs, including the miniaturized one seen from March of this year to July.
There’s also the simple fact that the Hash Ribbons, an indicator tracking moving averages of Bitcoin’s hash rate, has just shown that the miner capitulation phase is over. What’s notable about the “recovery” signal flashing is that this very signal marked a series of previous macro bottoms in Bitcoin’s price history.
Related Reading: What’s Next for the Bitcoin Blockchain? Top Developer Weighs In
Featured Image from Shutterstock
