Bitcoin price is back now at the mid $30,000 range after a quick plunge below $30,000 support this week. The short lived dip below support finally resulted in a worthwhile bounce, leaving behind a reversal signal that in the past has had god-like results.
If crypto bulls can hold at current prices by the time the weekly candle closes, a larger upward move could be on the horizon.
Bitcoin Price Forms Bullish Reversal Signal On Weekly
For months now $30,000 has held as support. But bears were able to push the price of the leading cryptocurrency by market cap to the yearly open at $28,800.
Related Reading | The Missing Ingredient From A Full On Bitcoin Reversal
The respectable attempt by bulls to resume the greater bull rally could hold, now that a bullish hammer reversal has formed on the weekly chart. For the signal to be valid, Bitcoin would need to close the weekly at $34,500 or higher.
A hammer reversal candlestick has preceded each bullish impulse so far | Source: BTCUSD on TradingView.com
Dropping The Hammer On Bears: The Reversal Signal Explored
A hammer is a single Japanese candlestick that shows an extremely bearish move that was essentially blocked by bulls. Support was breached, but bulls kept on buying anyway – leaving a long wick or hammer handle below what’s left of the candle body or head.
A single candle might seem insignificant as a signal, but in the past, it was the past things bears saw before Bitcoin went on a tear. This third hammer since the bear market bottom, could put the final nail in bear’s coffins.
Related Reading | Bitcoin Price Breaks Below $30,000 Support, Erasing 2021 Rally
The lagging indicator eventually crosses bullish and the top cryptocurrency goes on a few hundred percent rally – rinse and repeat. After one of the worst monthly “rinses” on record, the market is cleansed of leverage and it could keep the crypto cycle going a while long if there’s another bullish crossover.
As the chart above shows, hammers on the weekly have a lot of clout, however, they have also failed in the past. There’s a green hammer – slightly different from those outlined in boxes – when Bitcoin touched $6,000 in late 2019. However, this false bottom led to Black Thursday, where there was no such signals in sight. It wasn’t again until Bitcoin held a retest of $10,000 that the next hammer formed and another impulse began.
Featured image from iStockPhoto, Charts from TradingView.com