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As Bitcoin's Post-Fed Price Dip Extends, This Key Contrary Indicator Offers Fresh Hope: Godbole
A key contrary indicator is flashing green offering hope to BTC bulls anticipating a renewed upswing into six figures.
Updated Dec 20, 2024, 12:36 p.m. Published Dec 20, 2024, 5:36 a.m.
What to know:
- BTC has dropped nearly 10% from record highs.
- The decline has activate a key indicator that has historically marked end of price pullbacks.
Bitcoin's post-Fed price drop to $96,000 has activated a crucial contrary indicator that has historically marked the end of price pullbacks.
On Wednesday, the Fed cut the benchmark borrowing cost as expected but penciled in only two rate cuts for 2025, down from four projected in September. The central bank stressed that it's not interested in participating in a potential government plan to build a strategic BTC reserve.
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Since then, BTC has dropped over 8%, hitting lows near $96,000 at one point. As of writing, the cryptocurrency changed hands near $97,500, down nearly 10% from the record high of $108,266 reached early this week, CoinDesk data show.
The losses have caused the 50-hour simple moving average (SMA) to dip below the 200-hour SMA, confirming a bearish crossover. The pattern suggests that the ongoing pullback could evolve into a deeper one, although it has failed to live up to its reputation during the recent bull run.
Bitcoin has experienced a few pullbacks during its post-U.S. election rally from $70,000 to over $100,000, and each of these dips has ended with a bearish crossover of the 50- and 200-hour SMAs.
The latest crossover, therefore, offers hope to bulls expecting a renewed move into six figures above $100,000.
A potential bounce could face resistance near $106,000, a level identified by the descending trendline, representing the recent price drop. A violation there would open doors for record highs.
It's important to remember that patterns don't always play out as expected, and the contrary indicator discussed above may fail, potentially leading to a deeper drop. The first sign of trouble will be if prices move below the overnight low of $96,000, which could expose the swing low of around $91,000 recorded on Dec. 5.
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