The Golden Ratio multiplier uses multiples of the 350-day moving average to highlight areas of support and resistance. The method was developed by cryptocurrency analyst Philip Swift and can be found on lookintobitcoin.com.
The multiples of the 350-day moving average of the price used are 1.6 (the Golden ratio) and Fibonacci numbers (1, 2, 3, 5, 8, etc.). These values provide bands around the price and have served as effective signals at picking out high points in a market cycle for bitcoin.
The 350-day moving average is an important indicator, since every time the price of bitcoin exceeds this level, historically a new bullish cycle starts.
For instance, the chart below shows that during the bull run in summer 2019, the price of bitcoin peaked just above the x2 multiple of the 350-day moving average. Each line represents a multiple of the 350-day moving average, specifically the x1, x1.6, x2, x3, x5 and x8 multiples. Therefore, once the price crosses above certain multiples of the 350-day moving average, then it may suggest that the price has reached its maximum and may start to fall over the long term.
As bitcoin adoption gains traction, its market cycle highs have hit decreasing Fibonacci sequence multiples of the 350DMA. For instance, in the market cycles up until 2013, the peak reached the x8 multiple of the 350-day moving average. Also, the chart above that at the peak of the 2017 bull market, the price touched the x5 multiple of the 350-day moving average.
The top for each market cycle and which multiple of the 350-day moving average it occured it are shown below:
- 350-day MA x21 = 2011 top,
- 350-day MA x13 = 2013 top,
- 350-day MA x 8 = 2014 top, and
- 350-day MA x5 = 2018 top.
If this pattern continues to play out, then the next market cycle high should be near when price is in the area of the x3 multiple of the 350-day moving average, which is currently around $27,000.
Another interesting use of the Golden Ratio multiplier is that when using the x2 multiple of the 350 day moving average crosses below the 111 day moving average, the bitcoin price reaches a maximum. This signal has been accurate to within three days of the bitcoin price reaching a ceiling over the past three market cycles.