Bearish Bitcoin Signal Could Send Bulls To Early “Grave”

Bitcoin price is pulling back from highs set earlier this week and fear is already setting in over another potential drop. Although the top cryptocurrency is bullish according to most technicals and fundamentals, last night’s daily close left a bearish signal on the BTCUSD price chart that could suggest the fear is warranted.
If the bearish candlestick signal is valid and confirms, a sharp pullback could reset the recent rally almost completely. Here is a closer look at the potential “gravestone doji” and why it could put the nail in the coffin on the latest push by crypto bulls.
Bearish Candlestick Could Mean Highs Out For Bull Rally
The fact that crypto has taken center stage in Washington is doing more to legitimize the asset class than any situation before it. Institutions that weren’t paying attention before now cannot deny its existence and staying power.
Beyond the world of politics, Bitcoin holders are climbing in numbers and the network is recovering from the hash crash and related China mining ban. A generational buy signal has returned. Technicals across the board are mostly bullish, but last night’s daily close could be a prelude to a cleansing in the market.
Related Reading | What Bear Market? Bulls Now “In Control” Over Every Bitcoin Timeframe
Although Bitcoin is bullish even on daily timeframes, the cryptocurrency could turn down again to retest support lower. How low things go would be the next question to be answered, but for now let’s examine the bearish signal left last night after the daily close.
The signal is called a gravestone doji, and it tends to appear at the height of an uptrend.

Is a gravestone doji signaling doom for crypto? | Source: BTCUSDT on TradingView.com
RIP: Bitcoin Daily Candle Forms Deadly Gravestone Doji
According to Investopedia, a gravestone doji “is a bearish reversal candlestick pattern that is formed when the open, low, and closing prices are all near each other with a long upper shadow” or wick. The long wick left behind shows that the entire bullish advanced was wiped out by bears, which tends to indicate that a downtrend is coming.
It is also a signal to take profits on a bullish trade, and those who bought support at $30,000 could be taking some gains off the table given the resistance level here.
Related Reading | Three White Soldiers: The Signal That Shows Bitcoin Bulls Are Preparing For Battle
The gravestone doji is notorious for “reliability issues” due to poor pattern recognition. For example, any lower wick must be extremely small and the pattern isn’t confirmed until the next candle. At that point traders begin to enter or close positions, which could be too late depending on the strength of the reversal.
The gravestone doji is most reliable with another confirmation, and on daily timeframes there are other signs of short-term exhaustion. Late longs who FOMOed into Bitcoin after the bounce at $30,000 could be run before any further move to the upside, as the market retests support levels since left behind.
Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com

Avatar

Related Articles

- Advertisement -

Latest Articles

bitcoin
Bitcoin (BTC) $ 26,910.21
ethereum
Ethereum (ETH) $ 1,880.48
tether
Tether (USDT) $ 1.00
bnb
BNB (BNB) $ 278.73
usd-coin
USD Coin (USDC) $ 1.00
xrp
XRP (XRP) $ 0.533176
staked-ether
Lido Staked Ether (STETH) $ 1,879.46
cardano
Cardano (ADA) $ 0.346453
dogecoin
Dogecoin (DOGE) $ 0.069979
solana
Solana (SOL) $ 20.19
matic-network
Polygon (MATIC) $ 0.808896
tron
TRON (TRX) $ 0.078041
litecoin
Litecoin (LTC) $ 90.91
polkadot
Polkadot (DOT) $ 5.19
avalanche-2
Avalanche (AVAX) $ 14.59
binance-usd
Binance USD (BUSD) $ 0.999430
shiba-inu
Shiba Inu (SHIB) $ 0.000008
dai
Dai (DAI) $ 1.00
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 26,948.22
uniswap
Uniswap (UNI) $ 4.75
leo-token
LEO Token (LEO) $ 3.52
chainlink
Chainlink (LINK) $ 6.20
cosmos
Cosmos Hub (ATOM) $ 10.08
okb
OKB (OKB) $ 45.18
monero
Monero (XMR) $ 146.90
ethereum-classic
Ethereum Classic (ETC) $ 17.37
the-open-network
Toncoin (TON) $ 1.66
stellar
Stellar (XLM) $ 0.089205
bitcoin-cash
Bitcoin Cash (BCH) $ 113.76
lido-dao
Lido DAO (LDO) $ 2.37
true-usd
TrueUSD (TUSD) $ 0.999915
internet-computer
Internet Computer (ICP) $ 4.37
filecoin
Filecoin (FIL) $ 4.34
quant-network
Quant (QNT) $ 116.13
aptos
Aptos (APT) $ 8.13
hedera-hashgraph
Hedera (HBAR) $ 0.049665
crypto-com-chain
Cronos (CRO) $ 0.059844
arbitrum
Arbitrum (ARB) $ 1.18
near
NEAR Protocol (NEAR) $ 1.51
vechain
VeChain (VET) $ 0.018607
apecoin
ApeCoin (APE) $ 3.00
the-graph
The Graph (GRT) $ 0.117298
paxos-standard
Pax Dollar (USDP) $ 0.999945
frax
Frax (FRAX) $ 1.00
eos
EOS (EOS) $ 0.887542
algorand
Algorand (ALGO) $ 0.135167
the-sandbox
The Sandbox (SAND) $ 0.518416
rocket-pool
Rocket Pool (RPL) $ 48.74
optimism
Optimism (OP) $ 1.47
elrond-erd-2
MultiversX (EGLD) $ 36.34