Bitcoin ‘death crossover’ reappears pushing BTC price to $ 28,800 level
A technical sell signal is about to appear on the daily chart for Bitcoin (BTC).
On December 18, The price of BTC will experience a death crossover, a market indicator that occurs when a short-term moving average falls below a long-term moving average. In this case, Bitcoin’s 20-day exponential moving average (20-day EMA) will close below its 200-day moving exponential average (200-day EMA).
The indicator may end up alerting traders and investors to a possible liquidation in the coming sessions, given its history of predicting downtrends in advance.. For example, the 20-200 bearish crossover that appeared on May 30, 2021 was instrumental in bringing the price of BTC down from $ 36,500 to $ 28,800 in the next 24 days.
A similar scenario also emerged during the pandemic-led market crash of March 2020, exactly one day before the price of Bitcoin fell from nearly $ 8,000 to less than $ 4,000.
Bitcoin risks a correction to the range of $ 40,000 – 42,000
Bitcoin has been correcting consecutively for the past four weeks and also appears poised to close out the ongoing weekly session at a loss, primarily with the Federal Reserve taking more aggressive action on inflation.
In the past 30 days, the price of BTC has fallen almost 17.50%, including a correction from its all-time high of $ 69,000 on November 10. In doing so, The cryptocurrency briefly fell to $ 42,333, only to rebound dramatically later, cutting some losses, as shown in the chart below.
Nonetheless, the bounce did not turn into a bullish reversal: Bitcoin’s price has been trending down after encountering interim resistance near $ 50,000, a psychological level.
Bitcoin’s efforts to retest the $ 50,000 level for a bullish breakout face opposition from the resistance trend line of its descending channel, combined with further downside pressure from its 20-day EMA and EMA waves. 200 days, which is also close to USD 50,000.
As a result, the path of least resistance for Bitcoin appears to the downside. And with the death crossover looming, the cryptocurrency is likely to continue trending within the descending channel to test levels around $ 42,000 for a strong pullback move.
If the decline accelerates, the price may consider $ 40,000 as its target on the downside.
The RSI factor
Another leg lower would also push Bitcoin’s Daily Relative Strength Index (RSI) into its oversold territory below 30, a buy signal.. For now, the momentum indicator has attempted to break above its downtrend line, a move that previously predicted local Bitcoin price lows.
On a shorter time frame chart, the RSI has been consolidating sideways, anticipating that it would break out of the rectangle’s range to the upside. At the core of this optimistic outlook is a fractal from September 2021, shared by Mozzi, an independent cryptocurrency market analyst.
“Bitcoin is following a similar structure since the end of September”, he pointed the analyst on Saturday.
“Watch the RSI consolidate. Waiting for a clear break from the upper trend line for confirmation.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Each investment and commercial movement involves a risk, you must do your own research when making a decision.
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