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That bitcoin (BTC) could close on a long-term fund is generally accepted by now.
After all, the main cryptocurrency for market value has fallen by almost 70 percent in the last 13 months.
The challenge now is to gather the first signs of a long-term downtrend shift, which could be possible with the help of a simple 10-week moving average (SMA).
Acting as a resistance, the moving average proved to be a tough one to break in the eight weeks through November 14 – the day when BTC returned to the bear market with a sharp decline below $ 6,000.
In addition, BTC has recorded bearish peaks above the 10-week SMA in the last 13 months. Therefore, the acceptance above this obstacle could be considered a signal that the process of change of trend from bear to model has begun.
At the time of writing, BTC traded at $ 3,630 on Bitstamp, with a gain of 2.5% on a 24-hour basis. Meanwhile, the 10-week SMA is at $ 3,919.
It is worth noting that a full confirmation of a long-term bullish reversal would be a convincing break above the previous resistance to support the 21-month exponential moving average (EMA), currently at $ 5,400.
Weekly chart
As seen above, BTC has repeatedly failed to cross the 10-week SMA on a weekly basis (Sunday, as per UTC) before falling below $ 6,000 on November 14th.
Previously, BTC passed the 10 week SMA in the last week of February and April, the third week of July and the last week of August. These bullish breakouts, however, were short-lived: the BTC returned to the 10-week SMA in the following two weeks, trapping the bulls on the wrong side of the market (marked with arrows).
Put simply, cryptocurrency has struggled to break 10-week SMA across the current bear market.
As a result, only a prolonged rupture above the 10-week SMA (at least four weekly candles above average) would imply a bullish reversal.
The outlook remains bearish until prices are traded below the 10-week slimming SMA of $ 3,919.
Daily chart
BTC closed yesterday above $ 3,566 (27 December low), establishing a side channel on the daily chart.
With the weekly chart still unbalanced towards the bears, the lower end of the channel, currently at $ 3,465, could soon be violated. A breakdown of channels, if confirmed, would increase the prospects for a December decrement of $ 3,122.
view
- A prolonged rupture above the 10-week SMA could be considered an early sign of a long-term bullish reversal, although the outlook for a short-term move higher than the average would appear dark.
- A breakdown of the channel on the daily chart would strengthen the bearish setting and allow a demand test around the December low of $ 3.122.
Revelation: The author does not hold cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts for Trading View
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