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On April 29, the Bitcoin price created a massive bullish engulfing candlestick, increasing by more than $1,000 in a single day. The price reached a high of $9,455 before decreasing below $9,000 a few hours later.

Well-known cryptocurrency trader @Cryptopicasso previously posted a Bitcoin chart on April 25 that shows the price consolidating for a period of time.

Picasso suggested that the price could break out and increase all the way to $9,700, stating:

This shallow consolidation feels like a $2,000 candle brewing As above | So belowstraight shot to $9,700 ?

In this article, we will take a closer look at similar bullish engulfing candlesticks in Bitcoin’s price history and analyze the performance of the asset afterward.

Yesterday’s bullish engulfing candlestick had a body of 14%. The last time Bitcoin saw a candlestick with a body of 14% or higher was created was on October 25, 2019. What followed was a small bullish candlestick with a huge upper wick, followed by a gradual decrease that went below the start of the pump.

There are other similarities between these two movements. More specifically the increase above the 200-day moving average (MA), the fact that they are both transpiring in what seems like an upward correction after a downward move, and potentially the re-test of the previous ascending support line as resistance.

If the same movement were to transpire this time around, the BTC price would validate the ascending support line near $10,000, and decrease gradually towards $7,000.

In order to find the previous candlesticks with a body of similar magnitudes, we need to go all the way back to April and May of 2019.

The price created a bullish engulfing candlestick with a body of 18% on April 12. After a period of gradual increases, the price created three candlesticks with bodies of roughly 13%, created on May 11, May 13, and May 19.

However, the price action surrounding this movement was quite different than what we see currently. In order for the move to be more similar, the current candlestick would have to break out above the long-term symmetrical triangle that BTC has been trading in.

Previous bullish candlesticks with a body of 10% or more were seen in 2018 — more specifically on November 28 and December 20. These candles were more similar to the current movement since they are also transpiring after downward price action.

Similarly, they marked the top before a gradual downward move, which eventually caused the breakout outlined in the previous section.

To conclude, analyzing bullish daily candlesticks with similar bodies gives mixed results. However, those that have occurred after a correction have often marked the top, leading to a period of decrease.

The post Analyzing Bitcoin’s Bullish Engulfing Candlestick appeared first on BeInCrypto.

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