Is a Significant Bitcoin Surge Coming? Two Chart Signals Reflect Patterns Before BTC’s Rise to $109K

This is a daily technical analysis by a financial analyst and Chartered Market Technician.

Individuals who are bearish on cryptocurrencies should keep a close eye on recent bitcoin (BTC) chart formations, as they reflect patterns seen before the notable upward movement from $70,000 to $109,000 in late 2024.

The initial observation revolves around the weekly chart’s Moving Average Convergence Divergence (MACD) histogram, which serves as a momentum gauge to pinpoint potential trend shifts and reversals. Occurrences where the MACD crosses above or below the zero line generally suggest bullish or bearish momentum changes.

However, traders need to contextualize these signals with price movements. A bearish crossover requires confirmation through declining prices; if not, it could indicate genuine strength, potentially leading to a bear trap. This scenario appears to be unfolding with BTC currently.

The cryptocurrency experienced a downturn after the MACD dipped below zero in mid-February but soon gained foothold at the 50-week simple moving average (SMA) in March, subsequently rebounding above the $90k mark, even while the MACD has remained under zero.

This situation is reminiscent of last August and September when prices maintained SMA support amid ongoing bearish MACD signals. The indicator transitioned to a bullish stance around mid-October, validating the trend and leading to a significant price jump from $70K to $100K by December.

The next pattern in focus involves the 50- and 200-day SMAs. Roughly four weeks prior, these averages formed a bearish crossover, commonly referred to as a death cross, hinting at a potential long-term decline. However, this situation has transformed into a bear trap, with bitcoin finding robust support around the $75K level and reversing its trajectory.

Recently, the 50-day SMA has resumed its upward momentum and could soon surpass the 200-day SMA, potentially leading to a bullish golden cross in the coming weeks.

This pattern is strikingly similar to the trend from the previous year when the death cross in August signaled a bottom, shortly followed by a golden cross that ignited a breakout above $70K, ultimately driving prices to exceed $109K.

In essence, this suggests the potential for bullish volatility on the horizon, which could propel bitcoin significantly beyond the January peak of $109K.

Chart patterns are frequently employed to evaluate market strength and predict future movements. However, it’s crucial to keep in mind that past performance does not guarantee future results, and macroeconomic factors can swiftly alter market directions, rendering chart analysis less reliable.