One specific technical analysis indicator that has called every Bitcoin top and bottom throughout the bear market with as much as 86% accuracy, has just signaled that a big drop could be imminent.
Started From the Bottom Now We’re Here: Is $7,500 the Top in Bitcoin?
After starting off 2020 with a powerful rally, Bitcoin and the rest of the cryptocurrency market experienced a catastrophic collapse as the public learned about the coming impact of the coronavirus on the economy and everyday life.
Investors sold off every asset in a panic, fleeing to cash in order to weather the coming storm. The selloff took Bitcoin down to a previously unthinkable $3,800.
The unexpected move shocked investors, who had witnessed Bitcoin price trading above $10,000 just a couple weeks prior.
But once that “bottom” was put in the leading cryptocurrency by market cap quickly nearly doubled in value to roughly $7,500 where the current rally is struggling with resistance.
The current resistance may be proving to be too strong for the recently demolished asset to break through, and a chillingly accurate indicator backs up the theory that the rally is finished.
According to the stochastic indicator, among the most popular and commonly used technical analysis indicators, the top is likely to be in.
What Exactly is The Stochastic Indicator and Why Does it Matter?
The stochastic indicator is a technical analysis tool developed by Dr. George Lane in the late 1950s, designed to gauge the strength and momentum of a trend.
Past performance of the stochastic indicator, according to a prominent crypto analyst, has resulted in accurate calls as much as 86% of the time for bottoms, and up to 88% accuracy for tops, when it comes to Bitcoin.
With such little room left for error, the likelihood of the latest rally coming to its conclusion is high.
Related Reading | This Dead Accurate Indicator Is Signaling Major Crash Across All of Crypto
In the past, the indicator has also called tops when Bitcoin reached the recent high of $10,500 this past March, when Bitcoin reached $14,000 last June, and when the cryptocurrency reached its all-time high of $20,000 at the height of the bubble in 2017.
The indicator also called the most recent bottom at $3,800 and the previous bottom at $3,200, suggesting that although a top may be in, the bottom may also be behind us.
Because stochastic measures the strength of trends, any reversal signals provided by the tool don’t also come with potential price targets, so it’s difficult to know for certain if the bottom is indeed in, or if this latest peak was just a dead cat bounce before the real low is set. Given the success rate of the tool, however, analysts may want to also use stochastic to spot when the next short-term bottom is in.
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