Bitcoin price is back now at the mid $30,000 range after a quick plunge below $30,000 support this week. The short lived dip below support finally resulted in a worthwhile bounce, leaving behind a reversal signal that in the past has had god-like results.
If crypto bulls can hold at current prices by the time the weekly candle closes, a larger upward move could be on the horizon.Bitcoin Price Forms Bullish Reversal Signal On Weekly
The wild returns across crypto in 2021 are now a distant memory, having every last penny of the Bitcoin bull run from January 1 forward wiped out in the most recent drop below support.
For months now $30,000 has held as support. But bears were able to push the price of the leading cryptocurrency by market cap to the yearly open at $28,800.
Related Reading | The Missing Ingredient From A Full On Bitcoin Reversal
It was at that significant support level that Bitcoin bounced, and bulls were finally able to gain some momentum over the last few days.
A hammer reversal candlestick has preceded each bullish impulse so far | Source:
Dropping The Hammer On Bears: The Reversal Signal Explored
A hammer is a single Japanese candlestick that shows an extremely bearish move that was essentially blocked by bulls. Support was breached, but bulls kept on buying anyway – leaving a long wick or hammer handle below what’s left of the candle body or head.
Related Reading | Bitcoin Price Breaks Below $30,000 Support, Erasing 2021 Rally
Each previous hammer marked a major bullish impulse brewing in Bitcoin, and each time the LMACD – a momentum indicator was red on the histogram, but ready to turn upward.
The lagging indicator eventually crosses bullish and the top cryptocurrency goes on a few hundred percent rally – rinse and repeat. After one of the worst monthly “rinses” on record, the market is cleansed of leverage and it could keep the crypto cycle going a while long if there’s another bullish crossover.
As the chart above shows, hammers on the weekly have a lot of clout, however, they have also failed in the past. There’s a green hammer – slightly different from those outlined in boxes – when Bitcoin touched $6,000 in late 2019. However, this false bottom led to Black Thursday, where there was no such signals in sight. It wasn’t again until Bitcoin held a retest of $10,000 that the next hammer formed and another impulse began.Featured image from iStockPhoto, Charts from TradingView.com
