The current monthly candle on Bitcoin price charts is unlike any other that can be found since the bear market first began, with a massive bottom wick nearly double the length of the candle body itself.
Should Bitcoin price close the monthly candle at around or above $8,000, it would form a powerfully bullish reversal candlestick called a “hammer.” A close like this could signal a reversal is near, and that the low is likely in.
Bitcoin Price Could Close Monthly As Powerful Reversal Candle
Bitcoin price has had an unusual start to the year. After rallying over 50% and going on to retest highs above $10,000, weeks later, the first-ever cryptocurrency plummeted to under $4,000 after a historic, single-day collapse.
The resulting price action has left one of the largest monthly red candles on Bitcoin price charts over the last five years. Red candles this large and powerful haven’t been seen since the cryptocurrency last bottomed during the 2014-2015 bear market.
Related Reading | Economist: Government Overspending Amidst Crisis is Bullish for Bitcoin
After the record-breaking collapse to below $4,000, Bitcoin quickly recovered and grew by nearly double, leaving a massive wick behind on the monthly candle. However, resistance at $6,800 and higher are keeping the leading cryptocurrency by market cap from reaching higher levels.
If Bitcoin price can regain some momentum, and close the monthly candle this coming Tuesday back around or above $8,000, then the monthly candle will close as a bullish “hammer” reversal candle.
If the #Bitcoin monthly candle closes around $8,000 reducing the body candle… bullish hammer will come into play.
Be ready. pic.twitter.com/7zJ2EUX7xp
— Crypto Rand (@crypto_rand) March 25, 2020
Education: Learn All About the Bullish Hammer Japanese Candlestick
Bitcoin price charts, like the price charts of any assets, are often displayed with green and red candles with varying sized bodies and wicks. These are called Japanese candlesticks.
Other types of price charts include line charts, Kagi, Heikin Ashi, Renko, and Point & Figure. All offer analysts a different perspective on the price action, but Japanese candlesticks are among the most common for their easy to read signals and price patterns.
How these Japanese candlesticks close or how they appear in sequence can oftentimes help analysts and traders predict upcoming price action.
Certain candlesticks and patterns can even signal when a reversal is near. Among the type of candlesticks that provide such a signal, is the bullish hammer.
The candlestick is represented by a long wick at the bottom and a small or non-existent wick at the top of a small candle body. The candle resembles a hammer with a handle and can close green or red.
Related Reading | This 90-Year-Old Japanese Indicator Says Bitcoin Uptrend Is Forming
The candlestick depicts sellers coming on strong during the candle open, but the selloff is absorbed by buyers rapidly scooping up the asset at such low prices. This type of price action typically signals a reversal is due, as the price has fallen to attractive enough prices to resume interest once again.
However, the candlestick is only valid with confirmation, or with upside following the monthly candle close forming such a pattern. If the pattern does confirm, the bottom is likely in, and Bitcoin price will resume into an uptrend from here.
Featured image from Shutterstock
Credit: Source link