Is there more downside in Bitcoin’s near term future? Or was the recent drop to under $4,000 the final bottom before the next bull market?
Bitcoin Price Weekly Candle Closes as Shooting Star Doji
Bitcoin price is trading below $7,000 once again, closing out last night’s weekly candle at roughly $6,900. As the dust settled on the week’s price action, the candle closed out as a shooting star doji – a Japanese candlestick formation that typically indicates a reversal.
A shooting star doji is a bearish candlestick, consisting of an extremely long upper wick, and a candle body that is very small, and in close proximity to the candle open.
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This type of candle shows an extremely strong push from buyers that is eventually rejected from sellers, resulting in a long upper wick. Because the force from bears is so strong and buyers have are already exhausted from the initial push, the following price action is typically bearish, and often a dangerous drop is next.
A shooting star doji looks exactly the same as an inverted hammer candle – another reversal candlestick. The only difference is that a shooting star doji occurs at the top of an uptrend, while an inverted hammer happens at the bottom of a downtrend.
Last Shooting Star Doji Preceeded Epic Plunge to BTC Bottom
Shooting stars often precede an epic plunge, due to bulls running out of buying ammo in the initial surge in price, who are later taken by surprise by the strength of bearish traders.
Bitcoin price bouncing from lows around $3,800 and rocketing back upward to above $7,000 took a lot of buying momentum. But once the first-ever cryptocurrency met former support turned resistance, the asset was rejected resulting in a long wick and the weekly closing out as a shooting star doji.
The last time a shooting star doji was spotted on Bitcoin price charts across weekly timeframes, was on October 18th during peak Tether controversy. Crypto traders fearing issues surrounding the stablecoin’s parent company, sold off Tether for Bitcoin in a panic, causing the price to pump rapidly.
What was left behind was an enormous wick, and battered and beaten bulls who bought up what they had thought at the time was a massive breakout from downtrend resistance.
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With bulls running out of steam and bears gaining the upper hand, less than one month later, Bitcoin price broke through support at $6,000 and fell to its current bear market bottom at $3,200.
Now that another shooting star doji has formed on Bitcoin price charts, could another similar epic plunge be in the cards?
Featured image from Pixabay