#Earn Limited-Time 10% APY on $HTX Staking #HTX Community Spring Creation Contest #G: L1 for Mass Adoption & Omnichain Future
#G: L1 for Mass Adoption & Omnichain Future Bitcoin's momentum indicator is flashing a signal that should worry bulls
Bitcoin $BTC$68,452.21 bulls should be on their toes: A key momentum indicator that has been disturbingly accurate at flagging selloffs since the largest cryptocurrency hit a record high in October has just triggered.
The indicator is the moving average convergence divergence histogram, better known as the MACD. It's just crossed below zero for the third time, indicating a renewed bearish shift in momentum.
What is MACD anyway?
Before we dive into the market signal, let's see how the MACD works.
The indicator uses two lines. The first is the MACD line, calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. The gap between the two helps indicate momentum.
The other is the Signal line, which is the nine-day exponential moving average of the MACD line itself.
The really interesting part, though, is the histogram. That plots the difference between the MACD and Signal lines.
When the histogram turns positive, it signals bullish momentum; when it turns negative, as now, it signals bearish momentum. In both cases, the slope's steepness indicates how strong the momentum is.
The indicator is popular because it cuts through market noise to provide a clear picture of trend strength and changes. And right now, it's screaming "bearish."
Bitcoin's daily chart with the MACD histogram. (TradingView)
$BTC gets crushed when MACD turns red
Since bitcoin topped out above $126,000 in October, MACD has developed an almost-perfect track record. When it turned bearish, bitcoin crashed hard. When it flipped bullish, there were weak bounces that went nowhere.
The evidence is damning. Bitcoin's weekslong back-and-forth trading above $100,000 came to an abrupt end after the histogram crossed below zero on Nov. 3. Prices plummeted from around $106
All Comments0LatestHot