Bitcoin Gold chart displayed in this analysis is a Daily tf with a logarithmic scale. Exponential moving averages and the ADX (Average directional index) as shown in the chart are discussed below:
(1) The span of the downtrend in Bitcoin Gold (BTGUSD) from ~ January 16, 2018 till current date is captured in this analysis using the 40 exponential moving average (EMA), 21EMA and 10 EMA. 40 EMA is shown in red color, 21 EMA in blue and 10 EMA in green.
The slope of these EMA’s indicate an overall downtrend in Bitcoin Gold (BTGUSD) as indicated by the red dotted line on the chart. Besides, price only successfully closing above the 40 EMA twice and not following through as indicated by the pink circles drawn on the chart suggests an overall weakness for the demand in Bitcoin Gold (BTGUSD) with sellers overwhelming buyers.
(2) The ADX displayed below the chart shows the ADX line with a –ve slope which indicates a trendless environment, ranging price movement or sideways price action at best. The pink circle on the ADX where –DI line and +DI line appear to meet each represents a balance between buyers and sellers. Equilibrium points are crucial as prices can trend in whichever direction the DI lines eventually resolves i.e.-DI on top of +DI or vice versa, with the ADX line gaining a positive rising slope.
Either way, the most conservative way to enter a long (buy) position if at all is to wait for price to close above the 40 EMA and consolidate above it. $41.03 as indicated on the chart is estimated to be the price level to watch for Bitcoin Gold (BTGUSD) in order to start considering any long (buy) position.
Alternatively, price returning back to the 40 EMA especially, consolidating and the breaking below consolidation could trigger another round of selling in Bitcoin Gold (BTGUSD) that could see price close below $22.85.
P.S. The use of the 40, 21 and 10 EMA in this analysis are solely the choice of the author since the techniques and strategies of working with the moving averages are thoroughly understood.
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