It’s an exaggeration to say Bitcoin is bullish, but what if the bulls are simply resting after a difficult “evening” and are about to prepare for a new morning? A potential bullish candlestick reversal pattern with a higher time frame called the Morning Star can predict this.
Here is a closer look at a potential reversal signal and the conditions needed to confirm an uptrend.
Jumping ‘Morning Star’ could start a bullish reversal
Bitcoin has been in a brutal downtrend since November 2021. A full month after Intense fear in the cryptocurrency market And some of the scariest macro conditions ever, few of which are willing to buy until clearer signs of a reversal emerge.
Here it can be an early sign, representing the early rise of each new day. The signal is called a morning star reversal pattern, which is a bullish three candlestick reversal pattern according to the candlestick study.
The use of Japanese candlesticks was developed by the 18th century Japanese rice merchant, Munisa Homma. It was not disseminated in the West until Steve Nison published Japanese Candlestick Charting Techniques in the early 1990s. Since then, they have become an important weapon in a technical analyst’s arsenal when used with indicators, patternsTrendlines and more.
Related reading | Hammer Time: The Bullish Signal That Could Save Bitcoin
A morning star setting is likely to form on the BTCUSD charts for two weeks, indicating that a strong bullish reversal in Bitcoin could be brewing.
The current candle must close above the upper black horizontal line | Source: BTCUSD on TradingView.com
Supporting Bitcoin Bullish Techniques
A downtrend is one of the prerequisites for a morning star formation. Bitcoin has been in a free fall For what feels like an eternity. The morning star reversal is characterized by a large black (or red) downward candle, followed by a doji candle. according to InvestopediaThe middle candle of the morning star captures a moment of indecision in the market as the bears begin to give way to the bulls.
Doji represent indecision in the market. After the formation of the doji, the bulls are surprised by a bullish white (or green) candle that approximates the strength of the lower candle, erasing the last phase of the downtrend in a jiffy. The pattern is confirmed only when it is completed, and indicates that the next three to five candles should be in favor of the bulls. Since this is a two-week time frame, this gives the bulls up to another six to ten weeks of bull market in an ideal scenario.
Technicals and extreme fear could set the stage for a reversal | Source: BTCUSD on TradingView.com
The opposite of the morning star is evening star, which have put bulls to bed for the past several months after confirmation (red box). The Morning Star (green box) is forming just outside the trading range, just like the Evening Star pattern.
Candlestick setups of this type must be supported by other techniques. In the above chart, the price is back down to retest the 2-week Supertrend line, where such a reversal could form. Bitcoin may also complete a file Expand Triangle Pattern Before wave 5 head to new highs. But to get there, Bitcoin has to hack some of the most bearish macro sentiment the world has ever seen.
Could the morning star be the sign that brings bulls a new dawn?
Here is a free 1-hour Japanese Candlestick Course from Tweet embed On how to identify patterns, read candles, use them for confirmation, and more. Enter the code: TONYBTC at the bottom of the page to access ithttps://t.co/UjnZXE4Uc8 pic.twitter.com/VEkAKpWuVO
– Tony “The Bull” Spilotro (@tonyspilotroBTC) 4 June 2022
Follow TonySpilotroBTC on Twitter or join TonyTradesBTC Telegram Get exclusive daily market insights and technical analysis education. Please note: The content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com