BITCOIN hit the 1W MA50! How has that traded in the past?

22 thg 6, 2021

Bitcoin has hit today the 1W MA50 (blue line on the chart) for the first time since May 2020 (May 25, 2020 weekly candle to be exact). That was more than 1 year ago and it was a time when after a 2 month consolidation, the price detached from the 1W MA50 and never looked back starting the impressive rally that peaked in April 2021. But what does hitting the 1W MA50 mean for BTC? Is it a good or a bad sign, mid/ long-term? Let's dive into its historic price action.


** The pattern since 2014 **
As you see on the main chart, since 2014, the 1W MA50 has been hit as a Support after a notable peak (or All Time High/ ATH) three times. Out of those three, it was twice at the start of a Bear Cycle (April 2014 and March 2018) and once after a Bull Cycle (November 2019) has already started (the current one).

In more detail:
- The April 07, 2014 1W candle that hit the 1W MA50, rebounded and made a High within the 0.5 - 0.618 Fibonacci retracement level just 7 weeks later.
- The March 26, 2018 1W candle that hit the 1W MA50, rebounded and made a High on the 0.382 Fibonacci retracement level just 4 weeks later (although that 1W MA50 contact was a Higher Low after the February 05, 2018 candle that bottomed initially lower. If we assume that was the low (though it came just shy of the 1W MA50) then the rebound broke the 0.5 Fibonacci level and even came too close to the 0.618).
- The November 18, 2019 1W candle that hit the 1W MA50, rebounded and made a High on the 0.618 Fibonacci retracement level just 12 weeks later. If it wasn't for the 'once in 100 years event' of the March 2020 COVID flash crash, it is possible that the new low would have never been made. That is why I classify it as an Abnormal Event and instead of a Bear Cycle, a continuation of the start of the Bull Cycle.


** The pattern before 2014 **
I have separated this phase from the post 2014 era, as Bitcoin was still in its early stages and still in uncharted waters. On its first Bear Cycle of its short history, BTCUSD hit the 1W MA50 (which as you see on the chart below only counted 10 weeks of registered candle action) on September 05, 2011. It never rebounded and instead went straight for the Bear Cycle's bottom in only 6 weeks later. Can we derive firm conclusions from the Cycle alone? I don't think so but definitely we shouldn't discount it from our analysis.




** The RSI on the post 2014 1W MA50 hits **
It is interesting to note however, that on all post 2014 1W MA50 hits, the RSI was within the 44.000 - 40.000 range.


So what do the above stats tell us for the current price action? Those indicate that now that the 1W MA50 has been hit, there are higher probabilities for a rebound towards the 0.382 - 0.618 Fibonacci retracement range. That happened 3 in a total of 4 times since BTC's genesis. Assuming today was that bottom, the 0.382 Fib is around $39000, the 0.5 Fib around $43000 and the 0.618 Fib around $47400 (all rough estimates). Do you think BTC will rebound as per the historic patterns and if it does which Fib will it hit? Or will it follow the 2011 Cycle and go straight for a Bottom?

Feel free to share your work and let me know in the comments section!



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