Bitcoin ‘death cross’ that pushed BTC price to $28.8K reappears

On the Bitcoin (BTC), daily chart, a technical sell signal will soon appear.

The BTC price will experience a “death cross” on Dec. 18. This is a market indicator when a short term moving average falls below a longer-term average. Bitcoin’s 20 day exponential moving average (20-day EMA), will close below its 200 day exponential moving average (200 EMA).

Given its track record of anticipating bear trends, the indicator could alert investors and traders about potential selloffs in the coming days. The 20-200 bearish crossover, which appeared on May 30, 2021 and smashed the BTC price to $36,500 to $28,800 within 24 hours, was an example of this.

BTC/USD daily chart with May 2021 death cross Source: TradingView

Similar deaths occurred during the March 2020 pandemic-led crash of the market, just a day after Bitcoin’s price fell from almost $8,000 to under $4,000.

BTC/USD daily chart with March 2020 death cross. Source: TradingView

Bitcoin could see a correction in the $40K-42K range

Bitcoin has been steadily correcting over the past four weeks. It looks like it will close the weekly session of losses, mainly due to the Federal Reserve taking more aggressive measures on inflation.

The BTC price fell by almost 17.50% in the past 30 days. This includes a correction to its record high of $69,000 set on Nov. 10. The cryptocurrency fell briefly to $42,333 but rebounded sharply, as can be seen in the chart below.

Daily chart of BTC/USD price. Source: TradingView

The rebound didn’t turn into a bullish reverse — Bitcoin prices have been trending lower since finding interim resistance at $50,000, which is a psychological level.

Bitcoin’s attempts to retest $50,000 in a bullish breakout are being impeded by its descending channel’s resistance trendline and additional downside pressure from its 200-day EMA waves (20-day EMA) which are also near $50,000.

Related: Analyst says Bitcoin bears don’t have the balls to sell into 2022 — related

The downside appears to be the path of least resistance. The death cross is looming so the cryptocurrency will likely trend inside the descending channel and test levels of $42,000 for a strong pullback.

If the price falls faster, it could target $40,000 as its next downside target.

The RSI Factor

A further drop would push Bitcoin’s daily relative strengths index (RSI), below 30 to its oversold territory, which is a buying sign. The momentum indicator is currently trying to break above its downward-sloping trendline. This move has previously predicted Bitcoin’s local bottoms.

BTC/USD daily chart with RSI breakouts Source: TradingView

The RSI has been trending sideways on a shorter timeframe chart. It was anticipating that it would break from the rectangle range to its upside. The core of this optimistic outlook lies in a fractal that Mozzi, an independent analyst on crypto-markets, shared with us.

BTC/USD 4-hour chart comparing RSI Trends from Sep. 2021 to Dec. 2021 Source: TradingView

The analyst observed that Bitcoin is following a similar structure since the end of September.

“Notice the RSI consolidation. Waiting for confirmation from the upper trendline. You should do your research before making any investment or trading decision.

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