In a significant development this week, bitcoin price broke above a bearish level on the weekly LMACD (Logarithmic Moving Average Convergence Divergence), marking the first time in 2023.
Does this mean another drop for BTCUSD, or do the bulls still have a chance to salvage the recent uptrend?
For the bears, Bitcoin momentum is taking a turn
Last night the weekly candle in BTCUSD opened with a bearish crossover in the LMACD. Today we saw a key support level at $27,000 fail, causing the cryptocurrency’s value to fall to $25,000.
Interestingly, this bearish crossover and sell-off coincides with an SEC announcement of enforcement action against cryptocurrency giant Binance.
The SEC alleges that Binance allegedly allowed US traders to trade unregistered securities. The list of securities included several top altcoins.
The timing of the legal action, technicals crossover and sell-off lends weight to Sir John Templeton’s axiom: “Show me the chart and I’ll tell you the news.” In other words, major news events often seem to be reflected in price action and can get through Observing chart patterns can be predicted.
There is a bearish cross on the weekly LMACD | BTCUSD on TradingView.com
Why the crossover might not be Crater Crypto
Even as the crypto market reacts to immediate news, it is important to interpret these developments in a broader context. If momentum continues to break away from the zero line, we could see a resumption of the previous downtrend, which could pose challenges for Bitcoin investors.
However, experienced traders will recall that the last time Bitcoin experienced a similar momentum pulldown from this level on the LMACD was just before the 2020 bull market. Despite the initial bearish crossover, the downtrend proved short-lived and paved the way for a significant price increase.
Looking at historical precedents, it is possible that the current downturn is not as bad as it first appears. However, investors and traders should continue to monitor the weekly BTCSD-LMACD along with other technical indicators and major news events for a balanced and comprehensive market perspective.
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