By CCN: According to technical analyst Josh Rager, the 3-day Guppy Multiple Moving Average (GMMA) on the bitcoin price trend has turned green following bitcoin’s recent rally. The last time this technical indicator signaled a change in trend, it led to a 25-month bull run.
With key technical indicators signaling the formation of a bullish trend for bitcoin and the rest of the crypto market, traders have started to consider the possibility of the rally of bitcoin sustaining throughout the short to medium-term without a significant pullback.
In technical analysis, GMMA is often utilized as an indicator that spots changes in trend and potential breakouts by evaluating the momentum of the market.
Cory Mitchell, a swing trader who worked with Fortune 500 companies, described the GMMA as an indicator of trend strength.
“The degree of separation between the short- and long-term moving averages can be used as an indicator of trend strength. If there’s a wide separation, then the prevailing trend is strong. Narrow separation, or lines that are crisscrossings, indicates a weakening trend or a period of consolidation,” said Mitchell.
The 3-day GMMA has indicated a change in trend to the upside for bitcoin for the first time since 2016, demonstrating the strength of the current movement of major crypto assets.
Although the bitcoin price has increased by more than 135 percent year-to-date against the U.S. dollar and other crypto assets such as litecoin and EOS surpassed 200 percent in year-to-date gains, there exists a strong possibility that the rally continues before a correction occurs.
Peter Brandt, a widely recognized trader, has said that bitcoin is going through a fear of missing out (FOMO) phase and that its current rally could further intensify before seeing a pullback.
“This is the FOMO phase of the advance. Once the majority of sold-out crypto bulls capitulate and chase this rally a more sizable correction will likely occur, stopping out the same bulls, who are chasing this advance,” he said.
As explained by global markets analyst Alex Krüger, there is little resistance above $8,500 for bitcoin. On May 21, Krüger said that above $8,500, a key resistance level exists at $10,000.
Considering the change in sentiment around the crypto market as shown by the 3-day GMMA, traders are anticipating the upside movement of crypto assets to continue, possibly without a large pullback, at least in the near-term.
One cryptocurrency trader said that resistance for bitcoin can be found at $10,000 and $11,500, and that bulls are in control of the market.
“One after the other resistances fall. Two remain $10,000 and $11,500. Once those are cleared, clear skies await. I’ll be looking for leveraged buys in the 8200-8400 area this week. Bulls clearly in control, not trying to fight the trend,” the trader said.
Jason Calacanis, a prominent Silicon Valley investor who has helped companies like Uber and Robinhood reach multi-billion dollar valuations, has said that in spite of the recent bull run of bitcoin, the asset still remains highly speculative and risky.
He said that investors should limit their exposure to the asset to 1 to 5 percent in the chance that it does not succeed.
“My position remains the same. Bitcoin will likely be replaced by a new technology & it’s manipulated It’s possible it’s built to last, but not probable, so keep your position to an amount you’re willing to loose For most, that’s 1-5% of net worth It will likely go to 0-$500,” he said.
This article was edited by Samburaj Das.