In a significant development this week, bitcoin price crossed lower on the weekly LMACD (log moving average convergence divergence), marking the first time this has happened in 2023.
Does this mean more declines for BTCUSD, or do the bulls still have a chance to salvage the recent bullish run?
Bitcoin momentum takes a turn for bears
Last night, the BTCUSD weekly candlestick opened with a bearish LMACD cross. Today, we saw a major support level fail at $27,000, which sent the cryptocurrency down to $25,000.
This interesting bearish cross and sell coincides with an announcement from the Securities and Exchange Commission (SEC) about enforcement action against cryptocurrency giant, Binance.
The SEC claims that Binance introduced trading of unregistered securities to US traders. The list of securities included many of the best digital currencies.
The timing of the legal action, technical indicator crossover, and selling give weight to Sir John Templeton’s axiom, “Show me the chart and I’ll tell you the news.” In other words, major events often appear to be reflected in price movements and can be predicted by watching chart patterns.
There is a bearish cross on the weekly LMACD | BTCUSD on TradingView.com
Why the intersection may not be a crater crater
However, while the cryptocurrency market may respond to immediate news, it is essential to interpret these developments in a broader context. If the momentum continues down from the zero line, we may see a resumption of the previous downtrend, which could pose challenges for bitcoin investors.
However, as seasoned traders will recall, the last time Bitcoin saw a similar momentum drop from this level on the LMACD was before the 2020 bull rally. Despite the initial bearish cross, the downtrend proved short-lived, paving the way for a significant rally in the price.
Given the historical precedent, it is likely that the current downtrend will not be as dire as it first appears. However, investors and traders should continue to monitor BTCSD’s weekly LMACD along with other technical indicators and major news events, while maintaining a balanced and comprehensive view of the market.
