A fundamental technical signal appears in the market, suggesting that a trend reversal is possible
At the end of almost every week, the volatility of the cryptocurrency market decreases, with most assets entering consolidation mode or revert to their previous values. However, there are some important signals that we have no choice but to cover.
golden cross of the doge
As we mentioned earlier, the golden cross is one of the strongest technical indicators that has proven to be one of the most accurate tools for determining a long-term trend change, especially on longer time frames such as one day or one week.
In the case of dogecoinThanks to two massive rallies in November, one of which occurred in late October, two exponential moving averages with periods of 50 and 200 days have converged and now form the golden cross sign, which Dogecoin last saw roughly two years ago. .
Such a strong signal could ultimately become fuel for a prolonged uptrend for Dogecoin and a signal to speculative traders who had been selling the meme coin as soon as possible to avoid a local correction. Local corrections often ended even with a midterm rally in the dog themed coin.
According to several backtesting studies on assets with similar volatility to Doge, the reversal signal was accurate more than 50% of the time, which technically makes it an effective technical analysis tool that can actually used in practical trading strategies.
The failed breakout of Ethereum
Unfortunately, the momentum from Ether was not enough to easily overcome the existing resistance level reflected in the form of a 200-day moving average, and the price of the second largest cryptocurrency on the market reversed below the $1,300 price threshold. .
However, it is too early to call it a day. The inability to break the resistance level could be purely temporary considering that the market is entering a weekend trading session where most market participants will refrain from trading, making the market very less liquid and sometimes less volatile.
As trading markets open on Monday, Ethereum volatility should return to normal, along with the volume and liquidity of the asset. Hopefully, positive sentiment among crypto investors will prevail, especially after Jerome Powell's dovish speech on upcoming rate hikes and the general state of the US economy.
flourishing market
Despite the slump that covered the market earlier in the month thanks to the FTX implosion, the cryptocurrency industry seems to be doing much better now. Most assets entered December with single and even double digit gains while showing some major market signals that may suggest gradual market recovery in the coming year.
Considering the Fed's pivot, the dust settling around FTX, and the recovery of traditional financial markets, the cryptocurrency could start to thrive once again and eventually break the downtrend it entered in late 2021. .
