For the first time in over three months, a widely tracked bitcoin (BTC) price indicator has turned bullish, suggesting that a move to annual highs is ahead.
On the three-day chart, the moving average convergence (MACD) histogram-an indicator used to identify trend reversals and trend strength -has crossed above zero, confirming a bearish-to-bullish trend shift. In the first half of July, good reading was last recorded.
Seasoned traders may argue that the bullish turn of the MACD can not be trusted because it is based on lagging indicators of moving averages (MAs).
The MACD breached over zero middle of last year, confirming a bottom was created near $3,100 and remained in the bullish zone throughout the first three months of the period, though the rally for the recovery of Bitcoin remained above $4,000.
On April 2 the cryptocurrency broke into a bull market with a convincing move over a lower bearish $4,236 high created on Dec. 24.
On November 14, the histogram fell below zero as prices infringed on the $6,000 long-held support. What resulted was a $3,100 selloff.
Going further back, a meteoric rise from $7,000 to $20,000 followed the bullish turn of the indicator in October 2017. Meanwhile, in early January 2018, a drop below zero fuelled a deeper slide in the price of bitcoin from $13,000 to $6,000.
So if history is a guide, the latest bullish turn of the MACD could see bitcoin breaking out of a four-month channel falling and challenging annual highs above $13,800 before the end of the year.
Supporting the bullish case is another piece of historical data that says BTC is picking up a powerful bid six months ahead of the May 2020 mining reward halving.
But the rise over null of the MACD has not yet been mirrored in price gains. Bitcoin is reportedly swapping hands-on Bitstamp at $9,470, marking a 24-hour increase of 0.6 percent, confronting rejection above the 100-day MA support at $9,625 during Asian trading hours.
Notably, for the third straight day on Tuesday, Bitcoin failed to close over the 100-day MA, facing rejection above $10,000 over the weekend.
Meanwhile, state media in China called on investors to remain rational and avoid speculative behavior. The warning came after the sharp increase in blockchain-related stocks in China on Monday.
Investors poured money into bitcoin and blockchain-focused stocks after President Xi Jinping said last week that the second-largest economy in the world should accelerate its blockchain technology adoption.
Chinese state media's comments may force investors to shrink high expectations, leading to a drop in prices. Therefore, a pennant breakdown seems likely.
