The orange line is 200-day moving average is represented as a line on charts and represents the average price over the past 200 days or 40 weeks.
If we look at the chart 200DMA plays its role as resistance during the bear market and during a bull market, it acts as a support line.
The Mayer Multiple simply takes the ratio between the price and 200 days.
When the price is much higher than 200 days and becoming far away from the line, it wants to go back (overvalued Mayer Multiple), conversely when it is below the 200DMA and keep falling, highly likely that trend reversal is going to happen soon, aka undervalued Mayer Multiple.
- 0.8% - undervalued, 20% below the Mayer Multiple
- 2.4 is overvalued, 2.4 times larger than the moving average.
So by multiplying 200DMA by 0.8 or 0.24 we can establish a pricing band.
If we look at the peaks in January and February we see that we jumped above that 2.4 and then we went back to the undervalued zone.
The current situation shows us that we are on the way to 100k or above once we reach 2.4 line.
It is not financial advice.
Inspired by Glassnode
If we look at the chart 200DMA plays its role as resistance during the bear market and during a bull market, it acts as a support line.
The Mayer Multiple simply takes the ratio between the price and 200 days.
When the price is much higher than 200 days and becoming far away from the line, it wants to go back (overvalued Mayer Multiple), conversely when it is below the 200DMA and keep falling, highly likely that trend reversal is going to happen soon, aka undervalued Mayer Multiple.
- 0.8% - undervalued, 20% below the Mayer Multiple
- 2.4 is overvalued, 2.4 times larger than the moving average.
So by multiplying 200DMA by 0.8 or 0.24 we can establish a pricing band.
If we look at the peaks in January and February we see that we jumped above that 2.4 and then we went back to the undervalued zone.
The current situation shows us that we are on the way to 100k or above once we reach 2.4 line.
It is not financial advice.
Inspired by Glassnode