When Bitcoin’s 50-month EMA is left behind, there may be a deal to be had. That is the view from Rekt Capital, an analyst with a large following in the crypto space.
Historical Patterns and Current Deviation
Rekt Capital has noted that the asset has fallen below this 50-month exponential moving average, a benchmark that has been central to its price history for some time. Back in February, the firm was tracking a macro triangle in the charts, a kind of formation you see in the early stages of a bear market. Combine that with the latest dip below the 50-month line and it paints a picture of near-term headwinds, even if the long-term outlook remains positive.
There is a pattern to observe: when the price moves to the other side of the 50-month EMA, it often creates a good entry point. Rekt Capital says these are times when the market is full of caution, which is exactly where one can find value if the investment horizon is long enough.
Comparing Past and Present Bitcoin Deviations
To put it in perspective, Bitcoin has a history of pulling back from its peaks. In 2017, the price was 22% off its all-time high, and as of June there was a 10.5% swing. At present, we are seeing a 16% deviation.
For Rekt Capital, these kinds of retracements from former highs and even the 50-month EMA are what make up the ‘bargain framework’ for the asset. The idea is to spot when Bitcoin is well below where it has been before, opening the door for investors to build positions at a discount. With the numbers where they are, it seems we could be in for another one of those opportunities.
EMA Flipping: Resistance and Short-Term Price Action
Rekt Capital is issuing a word of warning: the 50-month EMA, which has in the past supported prices, has now turned into resistance. Even with some gains following the latest dip, this kind of technical reversal stands in the way of further near-term moves and is likely to keep the market on edge for a while.
It would be wise not to put too much faith in a rally when the overall picture is one of fragility. The better course of action for an investor is to watch for any break below the key moving averages instead of chasing a quick bounce, should the 50-month line hold its ground as a ceiling.
Systematic Investing and Strategic Outlook
There is value in a methodical approach to riding out the ups and downs of Bitcoin, as Rekt Capital will be the first to tell you. To that end, the analyst has put out an open call for his new Crypto Investing School, where he is building a community to show people how to put their crypto investments on autopilot with some structure. It is about being able to spot the kind of signal that comes with a 50-month EMA break, for instance, so one is in a better position when the next move in the market happens.
All told, we are seeing a dip below that 50-month line which could be a good deal, but it is wise to keep an eye on what lies ahead in terms of resistance and any further turbulence at important technical markers.
Source — Rekt Capital: https://www.youtube.com/watch?v=s22yyxspRT0
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