Bitcoin price is still fighting for it Hold on to the $30,000 support On higher time frames after crashing it over a week ago now.
With buyers stepping in after the drop, there is an opportunity for the bulls to stop the downtrend by setting up a bullish reversal candle. Learn more about the potential setup and find out if it’s ‘hammer time’.
A bullish hammer can put an end to a bear market
You wouldn’t necessarily know this from the intense bearish sentiment or the recent crash and resulting panic in the cryptocurrency market.
But if you look at the medium time frame price charts, Bitcoin bulls may be preparing to stop the bleeding and stage Bullish hammer reversal.
Japanese candles are said to have been developed by the so-called “god of markets” Honma Munihisa. Humna was a rice merchant and wrote the first ever book on market psychology.
Candlesticks consist of a body and a shadow, often called the wick. They are usually depicted in red and green, or black and white (open and closed). Each candle contains information about the open, close, low and high of the trading session it represents.
How the candle opens, closes, and the tops and bottoms identified during the session will shape the candle, often providing information about what could happen in the market – and what might happen next.
Could this hammer put a stop to bears? | Source: BTCUSD on TradingView.com
Technologies that support setting up a Bitcoin reversal
On the weekly and 2-week time frame charts of BTCUSD, the top cryptocurrency is working on a bullish hammer. The soaring hammer has a long lower wick that acts as a handle, a small upper body, and little or no upper tines.
Although a bullish signal only takes one candlestick to indicate a bottom, it is only confirmed by a strong follow through back to the upside.
There are plenty of technicals supporting a reversal | Source: BTCUSD on TradingView.com
Hammers are most effective when they follow a sequence of at least three downward candles, backed by bullish technical indicators.
A bullish hammer occurs at what could be the end of wave 4 of the expanding triangle retracement, according to the Elliott wave principle. MACD is retesting the zero line, as happened during wave 1 of the Black Thursday correction. Each bottom, also accidentally touched the lower Bollinger Bands before rebounding to the upside.
Related reading | Bitcoin Bear Market Comparison Says It’s Almost Bull Season
Will this hammer of ascent confirm and stop the bloodbath from continuing?
Here 🧵 in my full Elliott Wave analysis about # bitcoin And why I don’t think there is a bear market – and why do I expect the last leg any day now.
– Tony “The Bull” Spilotro (@tonyspilotroBTC) May 15 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