Closely followed crypto analyst Nicholas Merten is looking at one price model that suggests Bitcoin (BTC) is oversold and ready for a sizeable rally.
In a new video, Merten tells his 511,000 subscribers that he has his eye on the Mayer Multiple, an oscillator that uses several ratios between price and the 200-day moving average.
The oscillator is often viewed as one of the more critical moving averages amongst high-timeframe traders.
According to Merten, the Mayer Multiple is currently strong, suggesting that BTC is due for upward price action.
“When we’re below the green line, that’s usually a time or an indicator that price is oversold and that it’s a time to get bullish on Bitcoin. Not only due to the fact that price not only tends to trend higher afterward in the short term but really over the next foreseeing months, it’s likely that after it dips below the green zone after it is set to go up towards the pink band where generally markets are overbought and it might be time to start looking to take profits or chips off the table so to speak.”
Merten says throughout the recent history of Bitcoin, the Mayer Multiple has acted as a good indicator for identifying the bottom of a bearish trend for BTC. The analyst cites Bitcoin’s price reversal in July of last year and the pandemic-induced market crash of March 2020.
“We can see here now that price has had a healthy correction back down below this green range here in February of this year. And it’s very similar to what we saw back here in July of 2021 right before prices started to spring higher.
On top of that as well, we’ve seen this not just here within the past couple of months holding relevancy but… holding relevancy back here during the March [of 2020] correction where price had pulled back extensively due to the pandemic.”
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