The price of Bitcoin underwent a sharp correction yesterday and is currently trading below the 50-day simple moving average (SMA50). This is the first time in the last six months that bitcoin prices have fallen in this area. Analysts believe that if the price below this area stabilizes, the way will be paved for further fall.
to the the report Although the recent fall in prices is a relatively natural correction in bullish markets, one analyst believes that stabilizing prices below the simple 50-day moving average could slow down the downtrend.
Katie Stockton, an analyst and senior executive at Fairland Strategies, wrote about the bitcoin situation:
Loss of ascending acceleration is generally short-lived, but if several candlesticks close below the simple 50-day moving average close, it could be a reason for the onset of transverse fluctuations.
Bitcoin is currently trading in the $ 56,700 range. The digital currency fell $ 8,000 to $ 52,148 during Asian trading hours yesterday. The 50-day moving average is around $ 56,283.
According to Stockton, closing consecutive daily candlesticks below this moving average may pave the way for a fall to a lower support near $ 42,000.
50, 100 and 200-day moving averages are among the most important moving averages that traders use in their analysis. Falling prices below these simple moving averages will lead the market to more sales and, consequently, more falls.
On paper, daily candlesticks have no definition for the digital currency market, which is open 24 hours a day, 7 days a week. Such candlesticks are usually used in stock markets that have specific business hours; But analytics sites and websites that provide such services draw new daily candles 24 hours a day. Analysts also predict market trends based on the data in these charts.
Despite the sharp drop in the price of Bitcoin, the price of this digital currency has increased by 90% since the beginning of this year. In another part of his speech, Stockton says:
We think this price reduction is more of a counter-trend than a downturn; Because it happened after a leap that ended in a new historical climax.
Stockton went on to say that if the price of Bitcoin remained below the simple 50-day moving average, there was still a chance of breaking $ 69,000.