Moving averages (MA) are often used to determine the direction of a trend. Also, the relationship between the price and its MAs can provide important information in determining whether the current price action is bullish or bearish.
This is especially true in moments of reversal. A price movement above or below a significant MA combined with a bullish/bearish cross can be the exact moment that the current trend is broken and a new one begins.
Finally, similar movements above and below can be used in identifying fractals and finding similarities in order to predict future movement.
For Bitcoin, one such important MA has been the 200-day one.
Cryptocurrency investor and commentator @davthewav pointed out the similarity between the current price action and that in 2016:
— dave the wave (@davthewave) October 7, 2019
In 2016, after a long downward trend, BTC moved above its 200-day MA for 49 days. It again decreased below this for 49 days before finally breaking out.
Similarly in 2019, after a long downward trend, BTC moved above its 200-day MA for 175 days. The price again decreased below it on September 24.
If the fractal holds true, BTC will trade below its 200-day MA until March 13, 2020, before breaking out.
After BTC moved above its 200-day in 2016, it increased by 95% in a period of only 19 days.
Projecting this movement in 2019 is somewhat tricky. The reason for this is that we do not know where the 200-day MA will be at the time of the breakout.
After moving below its MA in 2016, the BTC price consolidated, decreasing by roughly 10%.
Making the assumption that a similar decrease will occur in 2019, the MA should be in the low $7000s on March 13, 2020.
Since the movement in 2016 took 49 days while that in 2019 took 175 days, we will assume that the breakout will be three times slower as well.
Doing that and measuring the breakout from a price of $7300, we should have a price of $15,000 for Bitcoin on May 15, 2020.
The Bitcoin price recently decreased below its 200-day MA.
If the price follows the fractal laid out by @davthewave, we should have a price of around $15,000 in May 2020, right before halving.
What do you think the price of Bitcoin will be in May 2020? Let us know your thoughts in the comments below.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
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