In this episode of NewsBTC’s daily technical analysis videos, we examine a recent showing from bulls after a bloody Monday morning open in Bitcoin price action.
Take a look at the video below:
VIDEO: Bitcoin Price Analysis (BTCUSD): September 19, 2022
Last night, we had the weekly close in Bitcoin price, and overnight, there was a deep plunge to the low $18K region. However, since the 9AM Monday morning open, prices have climbed by more than 5% already leaving a long wick behind.
Bitcoin price is forming a hammer. A hammer is a type of bullish reversal signal in Japanese candlesticks that represents a large, sudden presence from bulls once a key price objective was reached.
On daily timeframes, there isn’t all that much significant going on otherwise to confirm the signal. Price has once again touched the lower Bollinger Bands where the reaction occurred. The RSI suggests that the strength behind the move was very weak despite the depth.
Stochastic has also fallen to the oversold line. Holding above it leads to short-term rallies, but as you can see in the past price can fall right back down.
Since today is the first day of the week, the weekly candle in Bitcoin currently is a hammer also. With several days remaining before the close, it is unlikely it will stay that way. The head of the hammer, or real candle body, is hanging on just above former all-time high resistance.
Zoomed in closely, you can see why this move was especially demoralizing for bulls. Any traders who entered on leverage will have been stopped out after months of position building, leaving only those who entered on the wick to $17,500 remaining in a long position.
Given the macro situation and the extreme bearish sentiment, new lows appear to be a given. However, bearish momentum has been weakening on weekly timeframes, which is a bullish signal to go with a hammer candle. If bulls can close the weekly histogram in the green and complete a bullish crossover on the LMACD, a sustained rally could materialize.
Comparing it with the 2018 bear market bottom, once crossed, Bitcoin never returned to those prices.
There are only 11 days left in the monthly candle, and this is all the time bulls have left to prevent a much deeper selloff in BTC.
Although the current candle looks ugly, compare it to past levels where a meaningful reversal began. A doji pattern to close September could be the beginning of a cluster of support forming that tells the market new lows won’t be happening.
The onus is on bulls to make a strong showing within the next 11 days to put bearish momentum on monthly timeframes to a stop. In the past, the histogram turning pink was the turning point that let the market know bulls were taking back control over crypto.
Tony "The Bull" Severino is a level 3 CMT student (passed level 1 & 2), technical analyst, and the Head of Research at NewsBTC. Tony is also the Founder of CoinChartist.io – a technical analysis educational resource designed for crypto traders. Tony is a partner of Elliott Wave International, TradingView, and a member of the CMT Association.
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