Things are looking dark across the cryptocurrency market, especially for Bitcoin. But a potential reversal pattern called Morning Star could bring a return to the bullish narrative faster than the speed of light. Here is a closer look at the possible Japanese candlestick reversal pattern and the conditions necessary for confirmation.
Crypto Bloodbath: It’s Always Darkest Before The Dawn
Although the origin source is uncertain, 17th century English theologian and historian Thomas Fuller is credited with the quote, “it’s always darkest before the dawn.”
Cryptocurrency markets, and Bitcoin in general, have shown time and time again that when things seem at their worst, it is usually the best time to buy for the largest return on investment. It is what contrarian phrases like “buy the blood in the streets” and “be greedy when others are fearful” are meant to convey.
Things might seem bleak for Bitcoin considering a 38% correction from highs and a high-risk macro environment. But just as Fuller’s quote would indicate, the potential for a reversal is possibly here and it could begin with the dawn of a Morning Star pattern.
Bitcoin price must close $53,500 for conditions to be met | Source: BTCUSD on TradingView.com
The Level Bitcoin Must Reclaim To Confirm A Morning Star Reversal
On weekly Bitcoin charts, the leading cryptocurrency by market cap can be seen with a massive down move and corresponding red candle, followed by a green doji indicating a pause in the trend – or a period of indecision. Doji appear ahead of continuation, or a potential reversal.
If bulls can close the current weekly candle with an aggressive move of a similar magnitude, the doji will be the turning point of a Morning Star reversal pattern.
Related Reading | Learn More About Japanese Candlesticks Patterns In Bitcoin
A Morning Star is a bullish reversal pattern based on Japanese candlestick formation. For the pattern to be valid, this weekly Bitcoin candle must close above $53,500 or at least 50% of the red candle down. Without those conditions met, bears could continue to control crypto market price action.
Morning Star reversals have an accuracy of breaking bullish 78% of the time and according to Thomas Bulkowski, ranks 6th out of 103 different candlestick patterns in terms of overall performance.
— Tony “The Bull” Spilotro (@tonyspilotroBTC) December 15, 2021
Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com