Bitcoin price made a 5% move today, breaking above $19,000 momentarily. It is currently the largest daily rise in 2023 and since the FTX crash.
More significantly, the strong rally marked a level that triggered a possible trend reversal according to the weekly Parabolic SAR. In the past, the technical indicator has lived up to its name. What could it mean this time?
Bitcoin makes the biggest move of 2023
The beginning of 2023 has been positive for altcoins. But until today, Bitcoin has been moderate in comparison.
After today’s CPI data release, which hit 6.5% and Biden’s victory lap on inflation, the price of Bitcoin skyrocketed by $1,000, taking the major cryptocurrency above $1,000. 19,000 briefly.
More important than what happened today, was what happened in the weekly time frame. BTCUSDT (Binance) weekly tagged the Parabolic SAR for the first time since May 2022. The LUNA collapse sent Bitcoin and other cryptocurrencies lower, beginning the second, more aggressive phase of the recent downtrend.
The same Parabolic SAR signal was also activated before the 2019 crypto rally and 2020 to 2021 bull run (pictured below). Both rallies also blossomed from the exact same trend line earlier.
The Parabolic SAR has produced profitable results | BTCUSDT on TradingView.com
BTCUSDT Weekly Triggers Parabolic SAR Buy Signal
The Parabolic SAR is a technical indicator designed by J. Wells Wilder, Jr. and is used to detect changes in the direction of the trend. The tool consists of a visual overlay of SAR points hovering above or below the price action, determining the direction of the trend.
When SAR points are labelled, it suggests that a trend might “stop and reverse,” which is precisely what SAR stands for. Therefore, it is especially effective for timing starts and exits. Because SAR points travel up or down along with the trend, they can be used reliably to set trailing stops.
On weekly time frames, BTCUSDT (Binance) touched the Parabolic SAR, essentially telling short traders to exit the position. If the bears had used the PSAR to stop trailing losses, they have now been stopped, on purpose, on gains.
While the signal is not a guarantee of continued upside, considering that the potential signal for a trend reversal has appeared along with the coincident timing of a long-term trend line touch, the rally from this level could be more sustainable than many are prepared for.
