Serious FUD is beginning to set into the Bitcoin market, as fears of a potential bearish evening star doji appearing on the 1-Week chart set in. But just how worried should you really be about this doji pattern, and how much is it affecting Bitcoin’s price right now? Let’s take a look at the Bitcoin price analysis.
Bitcoin Price Analysis: 1-Week Chart
On the 1W BTC/USD chart we can see that the last weekly candle closed almost at the exact same price point that it opened at – around $8,740.
This doji on its own is known as a rickshaw man doji, which usually indicates indecision in the market. These types of candles form when trading reaches a state of equilibrium, and neither buyers nor sellers have been able to effectively influence the price.
Rickshaw man doji candles can foreshadow both bullish and bearish scenarios depending on how the next candle closes.
If the next weekly candle closes red and long, we will have a bearish evening star doji setup, which typically provokes a strong trend reversal. However, Rickshaw man doji can also indicate times of consolidation, as bulls prepare to launch a new uptrend.
The only way we’ll know for sure which way bitcoin price 00 is heading over the rest of this week, is to monitor its performance closely and watch out for other tell tale signs over shorter time periods.
Looking at the 4-Hour BTC/USD chart, we can see that bullish traders are currently battling hard to stay above a key diagonal support level. This particular trendline has allowed bitcoin to continue making higher lows over the last month and achieve a new YTD-high above the $9K mark.
This level therefore, is incredibly critical right now and a fall below it could be contrived as an early bearish reversal signal.
On the RSI we can already see signs of buyers growing weaker. The indicator line has printed 3 consecutive lower highs over the last 7 days, despite the price trend hitting a new YTD-high. This contradiction suggests that bullish traders are becoming increasingly exhausted, and that they may not have enough strength to continue supporting bitcoin’s price for much longer.
The MACD indicator is also looking bearish, with a 12/26-MA divergence and selling volume increasing on the histogram.
From this, we are anticipating bitcoin to break away from the current diagonal support and seek more secure refuge further down on the 0.236, 0.382 and 0.5 fibonacci levels. ($8,135.98, $7,536.50 and $7,051.98 respectively.)
Looking at the price action more closely over 30-minute candles, we can see how bullish traders are desperately trying to push back against the mounting selling pressure which briefly drove Bitcoin into the oversold region on the RSI.
Over the last 2 hours, BTC buyers have successfully managed to reclaim the $8,500 level by using the strong foothold at $8,450 below (red area) to launch an upside recovery.
Right now, the 0.382 fibonacci level at $8,516 is offering temporary support while bull traders regroup and regain composure. If they can defend this level throughout the rest of today, it could help to restore short-term confidence in the asset and maybe help to drive the price over the strong psychological barrier at $8,600.
However, we will still have to wait and see if this renewed short-term momentum will be enough to counteract the bearish signals appearing on the 4-hour chart, and be able to keep Bitcoin from breaking bearish through the diagonal support on the 4-hour chart.
Trade Bitcoin (BTC), Litecoin (LTC) and other cryptocurrencies on online Bitcoin forex broker platformevolve.markets.
[Disclaimer: The views and opinions of the writer should not be misconstrued as financial advice.]
Images courtesy of Shutterstock, Tradingview.com
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