Technical analysis is often criticized for relying on historical data and indicators. Critics sometimes describe technical analysis as “magic” and attempts to predict market movements based on historical data rather than true fundamental analysis.

However, understanding how price behaves with trend-following indicators can provide valuable information about the strength of the current price trend and possible momentum changes.

In Bitcoin’s case, the weekly MACD histogram offers an important indicator as a tool to measure momentum using the 12-week and 26-week exponential moving averages.

The MACD histogram has remained in the negative territory since April, showing one of the strongest bearish signals since 2022. However, Bitcoin’s price is moving within a slight downtrend channel between $50,000 and $70,000.

This creates a bull flag-like formation rather than a sharp downtrend, indicating that bullish tendencies in the market are still active.

Thomas N. Bulkowski, as one of the world-renowned chart pattern experts, defines a bull flag as a period of consolidation following a sharp uptrend followed by a slight downtrend.

This pause usually continues the previous uptrend and allows the price to climb higher. Bitcoin’s price action points to a bull flag formation that fits this description.

The combination of the MACD, which has been in a persistent downtrend since late April, and the flag-like price formation suggest that there are bullish signals below the surface.

Sellers failed to establish a strong downtrend, and losses consistently remained between $55,000 and $50,000 despite panic selling in early August. Prolonged seller burnout increases the potential for a sudden bull revival and price increases.

The upwardly trending 50-, 100-, and 200-week simple moving averages are another factor supporting Bitcoin’s bullish trend. Additionally, the green Ichimoku cloud, which indicates long-term bullish trends, also strengthens existing bullish signals.

These indicators, in addition to the bullish signals that Bitcoin shows in its technical analysis, offer investors a hopeful outlook for price increases.

However, it is important that investors continue to carefully monitor incoming macroeconomic data and trends in traditional markets.

General trends in the markets and economic data can influence the bullish signals Bitcoin shows in its technical analysis and shape investment decisions. Therefore, Bitcoin investors and market observers should pay attention to fundamental analysis along with technical analysis to comprehensively evaluate market movements.