Bitcoin technical indicator suggests low probability of ‘Santa Rally’
|Bitcoin may not be able to build on the relief rally as it heads into the year-end, a key technical indicator that’s flipped bearish amid heightened macro risks indicates.
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“The weekly MACD is on a ‘sell’ signal for the first time since April, increasing risk into year-end,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in a weekly research note shared with CoinDesk on Monday. There is room for a further sell-off to a point where the asset starts looking oversold in the intermediate-term, she wrote.
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The MACD histogram is a technical indicator used to identify trend reversals and trend strength.
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The indicator’s dip into negative territory implies a bullish-to-bearish trend change. Deeper bars below the zero line indicate a strengthening of bearish momentum.
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The previous bearish crossover confirmed in late April was followed by consecutive weekly losses of more than 10% that saw prices drop to $30,000 from $58,000.
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While bitcoin has bounced almost 20% from Saturday’s low of under $43,000, the cryptocurrency has yet to retake the bullish trendline from July lows breached last week.
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According to Stockton, the bounce could be fleeting with upside likely to be capped around resistance at $55,000. Lingering Fed jitters, Omicron fears and China property market concerns indicate limited upside in the short term.
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