Bitcoin is likely to sell out if it loses this important MA line

Bitcoin fell from $ 47,358 to $ 43,178 last week, fueling fears of a protracted sell-off.

Analyst Nunya Bizniz has Tick a bearish fractal on Bitcoin’s weekly charts, relative to its 21-week EMA.

Specifically, Bitcoin has so far closed below 21-week EMA support 18 times, but only stuck to its previous uptrend four times – as the dotted vertical lines in the chart below show.

Weekly BTC / USDT Chart | Source: Nunya Bizniz

In the remaining cases, a closing price below the 21-week EMA caused the price of Bitcoin to drop significantly. But averting a massive decline in August 2015 resulted in a “terrible bull run” for Bitcoin for the coming months.

Similarly, Bitcoin’s breakthrough below the 21-week EMA in May 2021 led below $ 30,000 near $ 30,000 for the first time since January 2021, pushing the price back above $ 50,000.

But overall, the break in Bitcoin price below the 21-week EMA triggered a sell-off that lasted nearly 78% of all cases.

Bitcoin is sliding back below the 21-week EMA

Bitcoin closed the weekly candle at $ 43,178 on September 26, warning of its 19th historical decline below the 21-week EMA ($ 43,502).

While the fractal is trending down, a closer look at the relationship between the 21-week EMA and the 50-week Simple Moving Average (SMA) offers a potentially bearish outlook that needs additional confirmation.

This was mainly due to the immediate reaction of traders to the two moving averages, particularly when the 21-week EMA (green line) fell below the 50-week SMA (blue line). This move will create a death cross that previously coincided with another decline in the Bitcoin market.

Bitcoin weekly price chart with 20-50 MA crossover | Source: TradingView

However, when Bitcoin slipped below the 21-week EMA (around $ 8,041) in the week ending January 29, 2018, it stayed in an uptrend until a death cross was created. After that, the price bottomed out near the 200-week SMA (around $ 3,187).

Similarly, the Death Cross (20-50 MA) comes in March 2020 just a week before the Black Thursday sale, led by the global market crash caused by Covid-19. Once again, Bitcoin ended its decline near its 200-week SMA (around $ 5,512) and rebounded to hit new highs in subsequent trading sessions.

Hence, it looks like a crossover between Bitcoin’s 21-week EMA and 50-week SMA could trigger the next sell-off with a target near the 200-week SMA (around $ 16,000).

At the same time, the Fib retracement levels near $ 34,712 and $ 27,580 may prevent Bitcoin price from moving towards the 200-week SMA.

Bullish scenario for Bitcoin

Although the price closed below the 21-week EMA, analyst Benjamin Cowen said speak that it stays above a bull market support band.

This band is formed by the 20-week SMA and the 21-week EMA, which are in the $ 40,500 to $ 43,500 support zone.

Benjamin Cowen is of the opinion, however, that the price must hold this band on the first test in order for Bitcoin to continue rising instead of breaking it.

Weekly BTC / USDT Chart | Source: Benjamin Cowen

In early August, Bitcoin regained the bull market’s support band when it broke the $ 40,000 mark. Cowen says it is important for Bitcoin to stay above this support band as history shows that the price often tends to break below it on the first test (red arrow).

“Holding above the support band (20-week SMA and 21-week EMA) on the first test would be a bullish scenario for Bitcoin. It usually doesn’t happen before …

Whenever Bitcoin breaks above a support band for the bull market, it usually breaks below that band on the first test.

The only time Bitcoin stayed above this support band was in July 2020 (blue arrow). This has resulted in a 500% stronger rally to the current all-time high near $ 65,000.

Weekly BTC / USDT Chart | Source: Benjamin Cowen

If Bitcoin holds above the current support band, a strong rally will follow, according to Benjamin Cowen. This could help Bitcoin climb into the 6-digit range.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Mr. Teacher

According to AZCoin News

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