Story by: Tony Spilotro
All eyes are on Bitcoin price once again, as the largest cryptocurrency by market cap has recently made several attempts to break out of downtrend resistance.
But as the recent rally has begun to fizzle out, an ominous candlestick pattern is potentially forming, which suggests that today’s close is especially critical and could determine where Bitcoin goes for the days, weeks, and perhaps months to come.
Bitcoin Price Daily Close Is More Critical Than Usual
On December 18, 2019, Bitcoin price touched $6,450, setting a local downtrend low, before the first-ever cryptocurrency went on a rally all the way to $8,900, reviving talk of a new bull run about to begin.
Related Reading | Bulls Beware: Last Bitcoin Downtrend Breakout Led To Bear Market Lows
Even more significant than last night’s close, will be today’s daily close at 7PM ET tonight. However today’s candle closes will serve as a strong statement by either bulls or bears, and one which will likely dictate the trend for the next few months.
Will the Evening Star Pattern Confirm More Downtrend Ahead?
According to the study of Japanese candlestick patterns, a cornerstone of technical analysis, a strong, bullish candle, followed by a doji, and then a strong bearish candle, is considered an evening star pattern, and one of the most reliable indicators that a short term trend is reversing.
However, the day is still young, and Bitcoin bulls could push the price of the cryptocurrency significantly higher, closing out the day with a statement that bulls are now in charge.
The way the pattern is traded is a stop loss is placed above the middle candle, as bears would remain confident that bulls are unable to push the price of the first-ever cryptocurrency higher than this level.by