Bitcoin price is again at $48,000 and with the newest weekly shut, momentum has flipped bullish for the very first time this 12 months. With the momentum now behind bulls, what would possibly this imply for the cryptocurrency market within the weeks and months forward?
The MACD And Bullish Weekly Bitcoin Momentum
Markets are at all times searching for equilibrium. When a big transfer materializes, the identical momentum that carried an asset upward, pulls it downward when the pattern begins to topple. This makes momentum among the many most necessary elements in figuring out if and when a pattern would possibly change.
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Few instruments measure momentum higher than the Moving Average Convergence Divergence. On weekly timeframes, the logarithmic MACD has opened with inexperienced on the histogram and fashioned a bull cross of the MACD line and sign line. It marks the primary time the sign has appeared in all of 2022.
Weekly momentum solely now opened bullish | Source: BTCUSD on TradingView.com
The above chart demonstrates that momentum shifts are inclined to yield vital pattern modifications, however are inclined to lag behind exact tops or bottoms. It is because of this that the MACD is taken into account a “lagging indicator.” Lagging indicator or not, the outcomes are what matter.
Below represents an evaluation of previous bull crossovers. Red rallies did not product vital new ATHs, however on common nonetheless yielded a 40% acquire. Green rallies produced a return of roughly 327% throughout three main impulses. The most up-to-date bull cross comes with a possible bullish divergence. Notably, a divergence appeared previous to the end result of the 2017 bull cycle.
Measuring the outcomes of previous momentum shifts | Source: BTCUSD on TradingView.com
What Wavelength Suggests About The Current Crypto Cycle
The mixed evaluation predicts a possible 40% rally from present costs on the low finish, which might take Bitcoin price towards ATHs, however fall barely wanting a brand new report. The greater finish of the dimensions tasks a doable 327% rally that may push the highest cryptocurrency a contact past $200,000 per BTC.
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Momentum strikes in waves. In the under chart, sine waves are layered over the LMACD in an effort to spotlight intra-cycle wavelengths. Combined with Elliott Wave Theory, the identical sine waves seem to foretell odd-numbered impulses and the underside of C-waves with a excessive diploma of accuracy.
A recreation of Brandt's comparability with one other search for good measure | Source: BTCUSD on TradingView.com
The smaller wave harmonic waves are merely items of the bigger cycle wave in blue. The blue wave construction added helps to elucidate the sudden power of Black Thursday in 2020, and why Bitcoin price couldn’t attain $100,000 in late 2021 because the market had anticipated. When the power of a bigger wave and smaller harmonics mix, main cycle occasions happen.
If momentum continues to comply with the identical wave construction, the ultimate wave up in Bitcoin may need already begun.
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Featured picture from iStockPhoto, Charts from TradingView.com