Bitcoin traders were expecting a breakout this week as an important technical buy signal was triggered and BTCUSD temporarily surpassed the $30,000 mark.
However, they were stranded as the market immediately reversed downwards. Interestingly, this fakeout could have been predicted by the divergence between the two BTCUSD price charts.
Why price patterns and technical signals may not work
Trading cryptocurrencies based on price patterns is a tricky business. Because so many people are looking at the same pattern, the market tends to make people pay for acting on obvious patterns. For example, a rising wedge pattern is generally bearish but can break out to the upside.
The same goes for the technical signals that most traders pay attention to, such as notable crossovers and momentum changes. This is exactly what happened recently with the bullish crossover of the BTCUSD Moving Average Moving Average Convergence Divergence (MACD) daily moving average.
MACD is a momentum indicator that gives a buy signal when the MACD line crosses below the signal line. This signal not only appeared in bitcoin, but was also confirmed on the BTCUSD spot exchanges, so what does it mean? It was a fake signal from the "future".
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