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Another technical Bitcoin indicator used to predict price trends has recently signaled yet another Bitcoin price bottom. The indicator uses different factors including the trading volume of the cryptocurrency as well as its current price to crunch up a prediction. According to this indicator, cryptocurrency prices may have bottomed in December 2018.
The MFI (short for Money Flow Indicator) or sometimes also referred to as volume-weighted relative strength index is a thorough algorithm used to identify pressures of buying Bitcoin as well as the selling the crypto token. The indicator oscillated its predictions between 0 and 100.
A higher or increasing oscillation signals an increase in buying pressures while a lower or decreasing signal hints towards a decrease in selling pressures. In simpler words, the MFI is used to validate price trends of the market and make predictions for the near future.
The indicator was very accurate during 14 November 2018 to 15 December 2018 when Bitcoin hit and its 15-month low price of $3,122. Falling down below $6,000 price point crushed the hopes of a bullish rally on November 14. The MFI also nosedived from a high of 43.00 at the same time and confirmed that selling pressure will increase soon.
The Bitcoin Indicator hasn’t always been in line with the actual market trend either. However, with time, the index has been accurate about the current or upcoming market trends. For instance, after December 15, the Indicator rose to a new high of 22.00 which contradicted the consistently falling prices of Bitcoin. Many people accept this behavior as a warning of a new rally on the horizon. After six months of consistently losing, Bitcoin price rose 10% in February, confirming the MFI’s results. The MFI rose to a new peak of 44.00 during the recent crypto rally.
The MFI is not the only indicator showing that the bearish crypto market is about to break its will. Many other algorithms like the bearish crossover and the moving average convergence divergence (MACD) have also concluded that the long-term bear market is about to get exhausted. However, the MFI is currently the only index that also accounts for trading volumes for its predictions which concludes that a bullish rally is on the horizon.
If the Bitcoin indicator is correct, a good question is which price point will prove to be the ground-breaking resistance point, breaking which, will initiate a promising rally? Many analysts are saying the $4,190 point is the one to beat as it is the highest value of the inverted bullish signal generated by the MFI last week.
In this sense, a clear breakthrough from the $4,190 resistance level should be able to get some traction in the market if the breach is backed by a sufficient increase in the market cap. After that, the next most significant level to break would be the $5,000 price which is more of a psychological resistance than a market trend one.