- The Supertrend indicator of Bitcoin has recently given a sell signal according to an analyst, indicating that the leading cryptocurrency may enter a larger price correction.
- Evaluation of BTC’s price movements on the daily chart showed that the coin fell below the Supertrend line on August 17. This decline followed a leverage cleanup in the derivatives market.
- The Aroon Down line was identified in a 57.14% downtrend. In this position, the downward trend remained strong, and the most recent low value was reached relatively recently.
According to a famous analyst, the Supertrend indicator in Bitcoin gave a negative signal, but investors should not lose hope.
What Does the Bitcoin Supertrend Indicator Signify?
The Supertrend indicator of Bitcoin has recently given a sell signal according to an analyst, indicating that the leading cryptocurrency may enter a larger price correction. The analyst stated that such a signal occurred as investors intensified coin distribution.
The Supertrend indicator is a tool used to determine and track market trends. Despite being a lagging indicator that produces a signal after the trend has already begun, traders often see it as a useful tool for trend confirmation and determining the right timing.
If the price of an asset is above the Supertrend line, it is considered to be in an uptrend, and it is usually interpreted as a buy signal. Conversely, if the price of an asset is below this indicator, a sell signal is generated, and the market is considered to be in a downtrend.
Evaluation of BTC’s price movements on the daily chart showed that the coin fell below the Supertrend line on August 17. This decline followed a leverage cleanup in the derivatives market, and over $2.5 billion in market liquidity was withdrawn within a few hours.
The analyst conducted a historical evaluation of this indicator’s price reactions in BTC and found that it accurately gave sell signals in June and November 2022, and buy signals in August 2022 and February 2023. According to the analyst:
“For a bullish reversal, BTC needs to close above $29,500. Otherwise, expect further losses.”
Investors Should Not Lose Hope
The severe bearish trend in BTC in the current market cycle cannot be exaggerated. The bear cycle was confirmed by the Moving Average Convergence Divergence (MACD) indicator of the coin. It showed that the MACD line following the capital outflow on August 17 crossed below the trend line. The indicator has since been positioned and only turned red histogram bars.
At the same time, the Aroon Up line has shown a downward trend since then and returned to a value of 7.14% at the time of writing. When the Aroon Up line is close to zero, the uptrend is considered weak, and the last high value was reached a long time ago.
On the other hand, the Aroon Down line was identified in a 57.14% uptrend. In this position, the downward trend remained strong, and the most recent low value was reached relatively recently. However, despite these concerning indicators, significant momentum indicators in BTC indicated a possible price recovery.
The Relative Strength Index and Money Flow Index of Bitcoin were identified at 25.37 and 10.94, respectively, in oversold zones. Typically, a buy signal is expected at this point because sellers usually struggle to initiate further price declines. However, market sensitivity needs to improve for this to happen.
