Chart of the Day - Wednesday, May 19th, 2021

Today’s Chart of the Day comes from lookintobitcoin.com. It’s a chart of Bitcoin over the past decade along with a fascinating indicator called the Pi Cycle Top Indicator. This indicator has been very timely at identifying cycle tops over the past decade for Bitcoin. It recently flashed an ominous sell signal around $63,000 on April 13th…the day before the Coinbase IPO. The indicator is calculated using two moving averages – one simple 111-day moving average (orange) and a 2x multiple of the value of the 350-day moving average (green). For my math geeks out there reading this – the indicator is named after Pi because, 350/111 = 3.153, which is the closest you can get to Pi by dividing 350 by another whole number.  Sell signals are triggered when the faster 111-day moving average crosses above the slower 2x(350-day moving average). Bitcoin is already down more than 30% from the most recent sell signal, so it may not be prudent to act on it at this point. But, given its stellar track record, the Pi Cycle Top Indicator appears to be a good tool for technicians to keep in their toolbox when analyzing the Crypto markets. For more on this little-known indicator, click here.