Bitcoin Is Up, But Is A Golden Cross Due?
Why You Shouldn’t Wait For A Golden Cross To Buy Bitcoin
The last time I wrote, there was a bit of a kerfuffle about death crosses (there was one), whether there was a bear market (there wasn’t), and about what, if anything, will “drive the market going forward” (it didn’t matter).
Chart 1 below was the state of play as of end of June:
The following chart shows the current snapshot:
As usual Chart 2 has the same support and resistance levels as before — because price has memory, and traders love patterns — except that it’s up-to-date and shows price having crossed back up above both the 50-bar moving average (MA) and the 200-bar MA.
Where bitcoin had been:
Price action was in the middle of playing out in a right shoulder of a head-and-shoulder top formation, ranging between $28,000 and $42,000.
This range matched that of the left shoulder period from Christmas 2020 to early February, also on the daily chart.
At the same time, market players and pundits were needlessly fixated on the then-impending occurrence of the “death cross,” where the 50-MA was expected to cross below the 200-MA (it did) to supposedly confirm a bitcoin bear market.
This obsession was pointless because bitcoin had already crossed the 50-MA from above starting in April and had already shaved $20,000 from its value before the death cross actually happened.
Where bitcoin is:
Bitcoin punched through the ceiling of profit-taking orders above $42,000 and is now ranging around $45,000.
I’m seeing the beginnings of a new (and still needless) preoccupation: when will the “golden cross” happen? Is there a new bitcoin bull market?
A golden cross happens when the 50-MA crosses above the 200-MA, and then both these moving averages continue to slope upwards to supposedly confirm a new uptrend.
As in the case of any lagging indicator function such as a moving average crossover, the main price action would have already been underway once the MA lines cross.
Where bitcoin might be:
My estimation is that bitcoin still has to make it past old order clusters between $47,900 and $49,800, which previously formed the neckline of the aforementioned head-and-shoulder formation, represented by the aqua-colored zone in Chart 3 below.
If bitcoin bulls had any impetus, they would have crossed that resistance zone much earlier, which leads me to believe the old order clusters from the neckline zone are still there to cap bitcoin’s progress for now.
For a little more clarity that the neckline is real, here’s Chart 4 below, which is basically Chart 3, but with a line chart instead of a candlestick chart.
So in the meantime, bitcoin will range sideways using $45,000 as the center pivot.
Will the golden cross happen?
Let’s break it down.
Since bitcoin broke above the 50-MA two weeks ago and remained above that level until today, it has gained $10,000 in value despite seeing no golden cross yet.
I think bitcoin is bullish but to call a bull market is a little premature.
Bitcoin will need to break above the aqua zone in Chart 4, test the resistance at $55,000, and then onward to the next resistance at $62,000.
All displayed chart support/resistance lines are either historical levels or actual confirmed order book levels currently being traded by major players based on available market intelligence.
This content is for educational purposes only. It does not constitute trading or investment advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.
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