The new weekly and monthly Bitcoin price candle kicked off with a powerful move to the upside, but yesterday was rejected with force.
Although it is extremely early in each trading session, the recent price action has left behind a Shooting Star doji on weekly and monthly timeframes, which could signal that a larger correction is inevitable.
Early Session Bullish Advance Rejected Back Down By Bears
Over the last three months, Bitcoin has climbed from lows set on Black Thursday at $3,800 to as high as $10,400. Despite over an over 150% climb, the leading cryptocurrency by market cap continues to struggle with resistance above $10,500.
After Sunday night’s important weekly and monthly close – which arguably closed bullish – Bitcoin price surged to over $10,000 in an over $600 move that took less than one hour to play out.
However, the first-ever cryptocurrency failed to hold above $10,000 yet again, and price fell back to $9,300 in a five-minute-long flash crash.
The daily price candle closed just shy of a bearish engulfing candle, giving bulls hope that the rally isn’t completely over.
Bitcoin Shooting Star Doji On Weekly and Monthly May Signal Inevitable Correction
However, a correction may still be imminent, as the weekly and monthly candles have since formed a Shooting Star doji.
The monthly trading session has only just begun, so it is unlikely that after nearly 30 full days of price action that Bitcoin will still be trading at $9,500.
The same type of doji is visible on weekly timeframes as well, and with just four days remaining in this week’s trading session, a close at this level becomes a lot more probable.
According to Investopedia, a close with a Shooting Star doji after an advance is often a sign that the rally is about to turn around.
This type of Japanese candlestick formation is a bearish signal, as it shows that although a strong push from bulls caused prices to spike, sellers took control and pushed the asset’s price back down to where the session opened.
Traders are advised to wait to see what happens during the following trading session before taking a position.
Occasionally, Shooting Star doji can give a false signal and instead is a sign that the asset simply met strong resistance before the advance continued.
Prior to the current Shooting Star doji, two additional matching weekly candlesticks triggered on the way up toward $10,000. With the two first Shooting Star doji acting as false signals, will this third time be the charm?
It’s possible, especially considering that the highly accurate TD Sequential indicator also triggered a “9” sell setup on the same weekly candle that is currently forming a Shooting Star doji.