Last night’s Bitcoin monthly April candle closed as a bullish engulfing, often considered a reversal candle by traders and analysts.
Bulls must beware, however, as one of the most respected top technical analysts recommends not trading this setup when the primary trend is down, as more often than not it leads to another devastating crash.
Bitcoin April Monthly Closes As Bullish Engulfing
In March, a day now dubbed Black Thursday caused Bitcoin to erase nearly all gains over the last year and a half of price action.
The record-breaking collapse took the first-ever cryptocurrency to below $3,800.
Related Reading | Bitcoin Price Sets Longest Stretch of Positive Weekly Growth Since May 2017
But this week, Bitcoin price rocketed to over $9,500 in a dramatic push from extreme lows. The rally continued through the monthly close, causing the leading crypto asset by market cap to form a bullish engulfing candle on the monthly timeframe.
The highest timeframes are the most effective signals, typically, so the crypto market is rightfully feeling bullish once again, especially with Bitcoin’s halving less than two weeks away.
Google Trends are already skyrocketing alongside the price of the crypto asset, potentially signaling the start of another bull market. But one expert focusing on chart patterns warns that the signal isn’t worth trading.
Not So Fast, Says Thomas Bulkowski, Chart Pattern and Technical Analysis Expert
Thomas Bulkowski is a world-renowned technical analysis who has released a number of books on chart patterns and has completed extensive statistical research across thousands of charts to find out the success rate of certain signals.
He has put together metrics on how far prices move after patterns confirm, how far the price will throwback to test support, and much more.
If anyone can speak with authority on which patterns are worth trading, it’s Bulkowksi. He’s even penned full encyclopedias on the subject.
On his website, called The Pattern Site, Bulkowksi explains that a bullish engulfing candle acts as a reversal 63% of the time. At first glance, that sounds incredibly bullish.
And while it is in the short term, Bulkowksi warns that when the primary trend is down, bullish engulfing candles are very short-lived, and are often followed by another drop.
Related Reading | Sell Bitcoin in May and Go Away? Ominous June Event Could Cause Crash
The same thing happened in the past in June 2018. Next, a three black crows pattern completed, and the deadly November 2018 drop occurred that took Bitcoin price to its bottom around $3,200.
Is this latest bullish engulfing candle in Bitcoin yet another fake-out that leads to further downside and a continuation of the downtrend? Only time will tell, but for now, the bullish momentum will continue as crypto traders anticipate a reversal with the halving. origin »
Just when traders and analysts were expecting the drop to accelerate following the formation of a head and shoulders pattern, and Bitcoin’s biggest weekly red candle since November, it did the opposite.
Cordless vacuums were once considered useful for little beyond cleaning small messes, but in the past few years, they’ve come to replace many full-fledged vacuums altogether. But handheld cordless vacuums often can’t hold a candle to their corded brethren, with lackluster cleaning performance or middling battery life.
After days and days of consolidation, bitcoin finally managed to break a new high for the first time in almost two weeks. This new high, so far, has been short lived, however, as it was almost immediately sold into by eager bears:Figure 1: BTC-USD, 4-Hour Candles, New HighOur current 4-hour candle is seeing a relatively easy retracement after days and days of an upward grind.
Leading into the London open, bitcoin broke through its local support level in a move that seems to be hinting toward a downward continuation:Figure 1: BTC-USD, Daily Candles, Broken Local SupportSo far, our daily candle has yet to close, but it is currently on schedule to close below local support.
Shortly after falling from its test of the low $4,000s, bitcoin managed to find support in the mid $3,500s. This has proven to be a relevant level over the last few months, and finding support here would be a sign of relatively strong demand:Figure 1: BTC-USD, Daily Candles, Local SupportThe high candle spread rejection following our test of the low $4,000s was an indication that we had strong levels of supply left in the market, but for the time being we are holding support.
Over the weekend, a strong rally was stifled by an even stronger rejection as the bitcoin market was shoved into a band of overhanging resistance. This band of resistance has been mentioned several times in our analyses over the last few weeks as it has proven impossible to overcome for the time being:Figure 1: BTC-USD, Daily Candles, Failed BreakoutThis run to the low $4,000s coincided with a breakout of a rather large symmetrical triangle consolidation shown above.
Days and days of sideways consolidation and tightening volume has been the name of the game for the bitcoin market. A narrow range of $200 has caused a weeks worth of activity to coil and consolidate in preparation for bitcoin’s next move:Figure 1: BTC-USD, Daily Candles, Narrow RangeThe figure above shows just how narrow the range has been over the last week as the market has continued to grind out support and fail to break above overhanging resistance.
For the better part of a month and a half, bitcoin has been fairly range-bound and unable to establish new lows or new highs. There are some bullish and bearish setups on the horizon for bitcoin, so let’s check out both sides of the argument because currently the market is sitting in the middle of Indecisionville — the most immediate sign of which is this glaringly obvious head-and-shoulders bottom reversal pattern:Figure 1: BTC-USD, Daily Candles, Head-and-Shoulders BottomThis current pattern is nothing more than a setup at the moment, but it represents one potential outcome of this sustained consolidation.
Another week has passed as bitcoin continues to coil in a tighter and tighter consolidation. Both price and volume continue to consolidate as bitcoin decides where the next major move will be.
In our previous discussion, a strong possibility for a retest of the low volume spring was noted as the market was beginning the early stages of an inverted head-and-shoulders (H/S) reversal (sometimes called a head-and-shoulders bottom).
Bitcoin sits precariously perched at the bottom of the annual market low and many bitcoin investors aren’t sure what to make of it. Although the market seems to be continuing its drift to new lows with greater and greater ease, there are a couple of bullish signals worth considering while the market continues to consolidate: Figure 1: BTC-USD, Daily Candles, New Market LowOn Friday, June 29, 2018, for the first time this year, the daily candles closed below the annual low of $6,000s.