Market Reversal is showing a bullish signal for the first time since November
On-chain analysis is an effective basis for many intelligent and mathematically sensitive crypto market watchers to test predictions. This relatively new field of technical analysis is growing rapidly, providing a wealth of information about what is happening on the blockchain network.
To help investors perform better, after 3 months of hard work, on-chain analyst PlanC has launched a new indicator: the Market Reversal Indicator.
This morning, the indicator gave a bullish signal not seen since late November 2021.
Has the Bitcoin Market Started a New Uptrend?
Price action CLEARitcoin
To answer this question, let’s first take a look at Bitcoin’s price action. The largest cryptocurrency by capitalization hit an all-time high (ATH) of $69,000 on November 10, 2021. Then the previous continuous downtrend began.
As a result of this drop, BTC lost 52% of its value, bottoming at $32,950 on Jan. 24, 2022. Such price action coincides with both the daily Supertrend indicator (red) and the descending resistance line (blue).
Source: Trade View
However, after Bitcoin posted the bottom, it rallied and attempted to break out of the descending resistance line. On April 2nd it created a large green candle with a body size of 11.41% and successfully broke out of this resistance. Additionally, the breakout was confirmed by increased volume. The price is currently trading in the $41,335 range.
In addition, bullish price action is accompanied by bullish signals in technical indicators. The RSI broke out of the downtrend line, then confirmed it as support (red circle) and continued to climb higher. The indicator is currently above the 50 line – a sign of an uptrend.
The MACD is in positive territory generating bullish momentum bars going up. However, the signal line is still below 0.
Despite these bullish signals, BTC has just hit long-term resistance at the 0.236 Fib retracement, which counts for the entire downside. This area is confluence with both horizontal resistance (red area) and resistance of the supertrend indicator.
Until the price breaks the $41,500 – $42,500 range and confirms it as support, the trend cannot be considered bullish.
Indicators Dvirtual dimension THow is the market created?
In view of this complex Bitcoin price action, the first time on April 2nd. introduced market reversal indicator very interesting. According to the author PlanC, he tested the indicator by combining on-chain metrics from Glassnode T3 data for 3 months of research.
Additionally, the analyst claims that the market reversal indicator shows strong performance over multiple timeframes from 10 years ago:
“I have been studying this market reversal indicator for 3 months. So happy to finally be able to share it. There will be more posts showing how well it has performed across all time periods over the last 10 years.”
In comment section, he added that he analyzed various combinations of over 50 indicators. However, he did not reveal which of the last 3 stats are included in the new tool. But in short, the original market reversal indicator first published on 4/2. published looks like this:
The source: PlanC
The explanation is very simple. When the indicator line breaks above 50, it signals the start of an uptrend. If it falls below 50, it is a sign of the start of a downtrend. In other words, the indicator suggests entering the market (i.e. taking a long position) when it crosses the 50 line. On the contrary, you should exit the market, that is, buy a short position.
Island display afternoon – Beginning of an uptrend?
Yesterday morning, PlanC released the first update of the metric with a slightly different layout, as users replied that the previous layout was unreadable. It is interesting when the indicator gives a signal to start an uptrend and turns green.
The author admits that this happened when Bitcoin price remained at $36,575. However, due to a lack of confirmation, he was slow to post tweets as one of the indicators of this tool was not updated daily until yesterday morning.
The source: PlanC
Note the strange coincidence in months of studying the indicator, release date and bitcoin price action, PlanC comment:
“The day after I posted my Market Reversal Indicator, it crossed the 50 line after staying below it for 82 days. I worked on it for about 80-90 days.”
Follow To update PlanC’s latest update this morning shows that the indicator is still above the 50 line (54.91 to be exact).
rice uptrend Bitcoin is new
At the end of the week, Bitcoin rallied above $40,000, which allowed the price to break a long-term descending trend line and technical indicators are giving signals for the start of an uptrend. Complementing the bullish scenario is the newly released market reversal indicator, which works on on-chain data.
Nevertheless, there are still many resistance levels ahead of us and if BTC does not break through them, there can be no talk of a long-term continuation of the uptrend. Brothers conclude:
“I never meant that we were completely out of danger. It’s just an exciting start and the first real change in momentum we’ve seen in a while. However, BTC still has a lot to do. A move above $46,000 will bring more confidence.”
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