The bitcoin price chart has flashed a bullish signal seen as an indicator that a big rally could be on the way. On Tuesday, the cryptocurrency formed a "golden cross," which happens when the 50-day moving average crosses through and above the 200-day moving average. Traders and analysts use it as an indicator that a market trend is about to turn more positive. The opposite, the so-called death cross, would indicate a bearish change. Bitcoin's price had been trending upward since about the end of July but tumbled last week around the time El Salvador adopted it as legal tender and as overleveraged traders liquidated billions of dollars in bitcoin positions. The price fell from $52,000 to about $46,000 that day. Still, the price of bitcoin has bounced back by 6% this week and is up 24% in three months, signaling this potential change in long-term trend. While a golden cross is generally a positive signal in chart analysis, past performance can't predict future results. Tuesday's is bitcoin's seventh golden cross in its 13-year lifetime, according to TradingView. Fundstrat noted in a memo to clients Wednesday that the last three golden cross events have been followed by price changes of 600%, negative 2% and 132%. Still, Fundstrat maintains its view of a bullish run for bitcoin through the rest of the year and that it's a buyer of both bitcoin and ether "into any near-term selling," it said in the note. In addition to the golden cross, that view encompasses a combination of fundamental metrics, technical indicators and macro forces at play. Katie Stockton of Fairlead Strategies said she's bullish on bitcoin from both short- and long-term perspectives, "but not because of the golden cross," she told CNBC. "This is not a bad thing, but it is a lagging indication of the turnaround in July, and it's not always the best timing device." She said bitcoin "has a short-term oversold buy signal alongside the S & P 500, after having seen a successful test of its 50-day moving average during a brief pullback. We expect the bounce to persist within the context of the uptrend, with room to the high from earlier this month (~$52.9K). A risk-on environment tends to benefit ether and other altcoins more than bitcoin." Bitcoin was in the red slightly while ether gained 1.4% on Thursday, according to Coin Metrics.
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The bitcoin price chart has flashed a bullish signal seen as an indicator that a big rally could be on the way.