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bitcoin macd bearish divergence monthly
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This Monthly MACD Bearish Divergence Warns Of Imminent Bitcoin Crash

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news, Technical analysis
Reading Time: 3 mins read
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Bitcoin price over the 24 hours plummeted from over $12,000 to as low as $11,150 in a violent selloff. As blood runs in the streets and the crypto market turns into a sea of red, investors must decide to buy the dip or sell before things get worse.

According to a massive bearish divergence on the monthly MACD dating back more than a year, selling may be the better of the two options. If the bearish signal confirms, what might this mean for the leading cryptocurrency by market cap?

Bitcoin Price Drops Nearly $1,000 In Less Than 24 Hours, Is This The Start of a Bearish Reversal?

After months of an uptrend, Bitcoin price may have started a reversal. A nearly $1,000 crash today is close to completing a head and shoulders formation, with a short-term target of $10,250.

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Crypto investors confident that a new Bitcoin bull run is beginning, are likely to hold strong through any coming correction, while traders “buy the dip.” However, a bearish signal on monthly timeframes in BTCUSD could suggest that a much larger crash is ahead.

Related Reading | Bitcoin Price (BTCUSD) Sees Violent $750 Drop, Top Formation Appears

According to the moving average convergence divergence indicator, or MACD for short, there’s a massive bearish divergence potentially forming across 16 months of Bitcoin price action.

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Bearish divergences appear when an indicator sets a new high, but price fails to do so. On monthly timeframes, the MACD rose to a higher level recently, than it did when the cryptocurrency traded at over $13,000 in 2019.

Bitcoin’s 2020 high thus far is $12,400, set just a week or so ago. This bearish divergence suggests that could be the high for the year, and another large drop is coming across crypto.

bitcoin btcusd monthly macd

Monthly Moving Average Convergence Divergence (MACD) Indicator Bear Div | Source: TradingView

BTCUSD Monthly MACD Bear Div May Have Revealed Dominant Downtrend Line, Retest of Lows Ahead

Extending that bearish divergence line even further, and switching to weekly timeframes, potentially reveals the dominant downtrend line that is still keeping Bitcoin at bay.

Just like Bitcoin already broke free from a downtrend line before exploding toward $14,000, a new, dominant downtrend line was formed after the second peak. Trend lines are considered valid when they have at least three touches.

bitcoin btcusd crypto downtrend line

BTCUSD Weekly Symmetrical Triangle ABCDE Correction | Source: TradingView

The top trendline of the symmetrical triangle drawn with the new dominant downtrend line perfectly matches the 8-degree angle of the bottom trend line, adding to the pattern’s overall symmetry.

Related Reading | Current Bitcoin Price Action Closely Follows Textbook Distribution Pattern

If the symmetrical triangle is still active, the formation would closely resemble an ABCDE corrective triangle. Such a pattern would suggest one more higher low must be set before the crypto asset completes a real breakout of the triangle, and starts a new bull market.

Tags: bitcoinbtcbtcusdBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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