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A representation of the Bitcoin virtual cryptocurrency can be seen in this photo illustration taken on June 14, 2021. REUTERS / Edgar Su / Illustration / File Photo
June 21 (Reuters) – For technical analysts watching bitcoin, a significant and potentially bearish chart formation has just occurred in cryptocurrency: a death cross.
The formation could signal further losses to come. Here are some details on what it is:
What is a cross of death?
Technical analysts use the term “dead cross” to describe when a short-term average trendline crosses below a long-term average trendline, signaling a change in price dynamics. The combination of 50 and 200 days often attracts the most attention.
Over the weekend, Bitcoin’s 50-day moving average fell below its 200-day moving average.
What happened to bitcoin?
Bitcoin, the world’s largest cryptocurrency, has long experienced volatility. It has lost more than 20% in the past six days and is down by half from its April high of nearly $ 65,000. Market participants cite nervousness over China’s growing crackdown on mining bitcoin in thin cash for losses. Read more
What should investors watch out for?
A crucial element for bitcoin will be its ability to hold above its May 19 low of $ 30,066, which is an initial target for bears. Going below this level would strengthen the negative signal of the cross of death.
Is the cross of death infallible?
No technical analysis indicator is perfect, including the cross of death in isolation. Most chartists use a combination of studies to derive directional signals.
For example, the last death cross on the bitcoin chart occurred in March 2020 after the cryptocurrency plunged nearly 60% over a six-day period and just before it began a historic rally. by more than 1000% in the following year.
Peter Stoneham is a market analyst at Reuters. The opinions expressed are his own. Editing by Cynthia Osterman
Our Standards: The Thomson Reuters Trust Principles.
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