While bitcoin is yet to explore levels above $10,000 seen in October, its Mayer Multiple (MM) or the ratio of price to the 200DMA of price has risen to 1.05 – the highest level since Oct. 27.
A positive MM indicates the price is trading above the 200DMA and the negative ratio suggests the price is sitting below the crucial average.
Chart analysts consider a sustained move above 200DMA (rising MM) a sign of bull market conditions.
On the other hand, the market is said to be bearish if the digital currency is charting lower highs below the 200DMA (falling MM).
The MM can also offer signals about overbought and oversold conditions.
A very high MM indicates the market has rallied too far above the 200DMA and an irrational exuberance has gripped markets, which often ends with a crash. For example, during the height of the bull market in December 2017, the MM had risen as high as 3.71.
A very low could be taken as a sign of extreme oversold conditions.