Potential Island Reversal Leaves Bitcoin Bulls Stranded

Tony "The Bull" Severino

4 years ago

3 mins read

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Months ago when Bitcoin price made it through $13,000 top analysts said “the train has left the station,” and they were right. Or maybe a rocketship would have been a better analogy. The cryptocurrency took off and has yet to refuel, until now.

With momentum waning, bears have staged an “island reversal” that could push off higher prices again for some time. Here’s what to expect from the tropical-sounding pattern that could leave bulls stranded for some time.

Technical Analysis Education: What Is An Island Reversal?

According to Investopedia, an “island reversal” is a price pattern on a daily candlestick chart that has a gap on each side of a the structure. “This price pattern suggests that prices may reverse whatever trend they are currently exhibiting, whether from upward to downward or from downward to upward,” a description reads.

The recent Bitcoin price action fits the pattern and the conditions that validate its existence to a “T.” An island reversal forms after a long trend leading into the pattern. Bitcoin’s performance has been incredible since March of last year.

At the climax of the trend, there’s an initial price gap, followed by a consolidating price cluster. Finally, there’s a gap back down on the daily chart, establishing the “island of prices isolated from the preceding trend.”

The theory behind the pattern suggests that the gaps left behind will go unfilled for some time.

The price action matches the "island reversal" pattern | Source: BTCUSD on TradingView.com

Will Bulls Be Left Stranded On Bitcoin Bear Island?

The island reversal was initially spotted by one of crypto Twitter’s top technical analysts on the CME BTC Futures chart. And although islands are typically associated with sun and sand, the island left behind here in Bitcoin could be deserted for some time – but how long?

A zoomed out look at the chart could provide some ideas of what’s to come.

Bitcoin could lose the RSI, but find support at the trend line on Stochastic | Source: BTCUSD on TradingView.com

Bitcoin’s island reversal comes at a time when indicators are finally turning down, the short-term parabolic curve has been violated, and a bearish wedge has formed on higher timeframes.

Fundamentals are bullish and more BTC is leaving exchanges each week. Perhaps a selloff could scare stronger hands into selling their coins.

But all is not lost for Bitcoin. The stock-to-flow model and the world’s best analysts are projecting much higher prices of hundreds of thousands per coin.

There’s also potentially another parabolic curve in process not fully developed yet that keeps the predominant bull trend in tact, even if things get volatile over the next several weeks ahead.

Featured image from Pixabay, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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