This Monthly MACD Bearish Divergence Warns Of Imminent Bitcoin Crash

Tony "The Bull" Severino

1 year ago

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.

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.

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.

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.

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.

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.

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.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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