BTC Golden Cross, is it Bullish?steemCreated with Sketch.

in LeoFinance •  3 months ago  (edited)

On Twitter and YouTube, I have been seeing many crypto folks talking about the golden cross forming on BTC daily chart. For the uninitiated, the golden cross is a chart pattern where a short-term moving average crosses above a longer-term moving average. Most TA folks look at the 50 SMA (simple moving average) crossing above the 200 SMA.

Golden cross formation on the BTC daily chart

As you can see from the chart above, the 50d SMA is crossing above the 200d SMA on the BTCUSD chart and this is the golden cross which people are talking about. The golden cross, as its name suggests, is typically a bullish signal. However, it does not always lead to bullish outcome. As we can see in the prior golden cross (18 Feb 2020) circled in green, BTC took a major dive soon after.

BTC golden cross on 18 Feb 2020 circled in green

As a result, the sentiments are rather mixed in this golden cross. Perhaps it is due to recency bias, I am actually seeing more bearish sentiment than bullish one on Twitter.

One thing which people often overlook in a golden cross is the trend. For a golden cross to have a higher probability of being a bullish signal, the trend of the longer-term moving average should be upwards. Let's look at a few historical examples on the BTC chart. One interesting thing to note here is that there aren't many golden crosses in the history of BTC. The TradingView chart which I found to have the longest history is the one from BitStamp (if you know of any with longer history do leave a comment and let me know 🙏) and I counted 7 golden crosses.

18 Feb and 20 May 2020

23 Apr 2019

15 Jul and 27 Oct 2015

11 July 2014

6 Apr 2012

Golden Cross Date200d SMA TrendOutcome
6 Apr 2012UnknownBullish
11 Jul 2014DescendingBearish
15 Jul 2015DescendingBearish
27 Oct 2015Ascending/FlatBullish
23 Apr 2019DescendingBullish
18 Feb 2020DescendingBearish
20 May 2020Ascending/Flat???

To summarize, of the 6 prior golden crosses observed, only 3 were bullish (50%). However, of the 4 golden crosses that had a descending 200d SMA, only 1 was bullish (25%). We have only seen one golden cross with an ascending/flat 200d SMA, and that led to bullish outcome. I am not going to call for a 100% here because there is only 1 sample, however, I will like to draw your attention to the uncanny resemblance of the 27 Oct 2015 golden cross to the one we are seeing now.

Prior to the 27 Oct 2015 golden cross, we saw a bearish golden cross about 3 months earlier on 15 July 2015. Similar to 27 Oct 2015, in this current golden cross, we saw a bearish golden cross 3 months back on 18 Feb 2020. We also see that the current 200d SMA is ascending/flat. Given all these similarities, I personally think that this current golden cross is more likely to be bullish than bearish.

Another reason for me to be bullish is that BTC has broken and closed above the long-term downward sloping trendline on the weekly chart (trendline in cyan). This in my opinion is a bullish sign. As long as BTC remains above the trendline, I think it will serve as a support for the next run up.

BTC broke above trendline in weekly chart

There is also a possibility for a bearish turn of event. As you can see BTC is forming a short-term double top pattern with $10,200 being the resistance. If BTC goes below the cyan trendline and fail to make it a support, then I will turn bearish. At that point, I think the potential downside targets will be $8k, $7.2 then $6k.

For now, I have more reasons to be bullish than bearish. However, nothing is 100% in technical analysis, this is just my thought process and please do not take it as financial advice. Due diligence and research are still required for your own investment. What do you think of this golden cross? Leave a comment and let me know 😁.


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ty, i be bull

😁

Interesting all this related to the study of graphics and behaviors that may occur in the near future. Sometimes I think that trading predictions are not possible, the curves do not indicate the path of the price, but the price indicates the path of the curves. However, I enjoy trying to predict some price or behavior.

All of 2020 has been difficult for predictions, the BTC is not far from this reality. But I like your reasons and criteria used in this study, I'm with you.

It is called technical analysis. It is popular school of thought in trading 😀

I have been looking at the price almost everyday. I was hoping for it to cross the 10K like everyone around. Let the bull run!

  ·  3 months ago (edited)

The downward trendline which I drew served as a support. Notice how the price bounced off it and never really close below the line. You can see from the chart,

image.png

As long as this pattern stays intact, I remain bullish 😉