Bitcoin is showing the first signs of a recovery, here’s how
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- What does the Demark indicator show on Bitcoin?
Bitcoin’s rally to $ 65,000 ended a long time ago, with the asset falling rapidly to $ 45,000. Bitcoin has continuously moved within the range over the past month, and the low volatility could indicate that the long consolidation is about to end.
According to the Bloomberg article, the 30-day volatility of the asset is currently moving to its lowest level since September, in addition to the price action of the largest cryptocurrency which remains negative. As the article suggests, it “shows signs of short-term exhaustion.”
In order to determine if the price movement of the asset is “exhausted”, traders use the Demark Sequential indicator which acts based on the price history. The indicator is a technical analysis tool, which compares the recent extremes of an asset with the equivalent price of the previous period.
The methodology allows traders to compare the current demand for the asset with previous periods and determine the directional trend of the market. Some traders have compared Demark with the RSI indicator, but the two tools work differently, with the RSI only counting closing levels when the aforementioned indicator includes both the highs and lows of a specific time period.
What does the Demark indicator show on Bitcoin?
According to the indicator, Bitcoin formed a “9-13-9” pattern, which is considered to be one of the strongest “burnout” signals in technical analysis. The same pattern appeared in March 2019, when Bitcoin was trading at around $ 3,800.
At the time of going to press, Bitcoin is trading at $ 46,000 and showing growth of 2%. Over the past seven days, the price of Bitcoin has changed 0.6%, which is considered extremely low volatility.