BTC Monthly MACD - Worried? You Shouldn't Be
Unless we're to be completely in the dark about price development, all we have to go on is the past. Looking at the previous cycle, you can see that even as price bottomed, the monthly MACD continued to decline for a full 8 months. Yes, you read that right - 8 months. This is simply because the MACD is primarily a lagging indicator. And yet some are now using the cross over and decline of the monthly MACD indicator as a leading indicator in predicting price to head down further. Simply put, this is dubious technical analysis.
The time to have been a bit worried about the monthly MACD was when it rose too steeply during the first half of 2019. Looking at the chart, you can see that this was uncharacteristic of the previous cycle and resembled more a mega bounce of a mega correction/capitulation. This was the time to be using the MACD as a leading indicator, for then it was predicting a coming correction of the unsustainable bounce/ move up. As opposed to being steeper than 45%, the next cycle up should have a less steep incline than that, which reflects lengthening cycles and reducing volatility in my opinion.
Going forward, the MACD should continue down with the angle line drawn serving as something of a mean line. A further five or so red bars on the histogram are now likely to match the previous green bars before the re-cross of the signal line and the move back up.
But all of this is lagging in regard to the price in the upper section of the chart. There are other TA factors better equipped to chart where price is heading now. As for the monthly MACD, if it's to be used properly, it's signaling the bottom is, if not in, near in insofar as its current position is compared to the previous cycle.
The time to have been a bit worried about the monthly MACD was when it rose too steeply during the first half of 2019. Looking at the chart, you can see that this was uncharacteristic of the previous cycle and resembled more a mega bounce of a mega correction/capitulation. This was the time to be using the MACD as a leading indicator, for then it was predicting a coming correction of the unsustainable bounce/ move up. As opposed to being steeper than 45%, the next cycle up should have a less steep incline than that, which reflects lengthening cycles and reducing volatility in my opinion.
Going forward, the MACD should continue down with the angle line drawn serving as something of a mean line. A further five or so red bars on the histogram are now likely to match the previous green bars before the re-cross of the signal line and the move back up.
But all of this is lagging in regard to the price in the upper section of the chart. There are other TA factors better equipped to chart where price is heading now. As for the monthly MACD, if it's to be used properly, it's signaling the bottom is, if not in, near in insofar as its current position is compared to the previous cycle.
Comment:
