With a market cap of $90 billion, Bitcoin is currently trading at $5,103 with 24-hours loss of 1.44 percent, at the time of writing, as per the data provided by Coinmarketcap. According to the crypto analyst, MagicPoopCannon, the price has printed “half of an enormous evening star Doji pattern.”
Since early February, this year, Bitcoin price has been in an uptrend on the weekly chart as we got to see seven straight weeks of green candles. We further printed a huge bullish candle when the price “exploded” above the weekly 200 EMA. However, the price hit a ceiling right at the weekly 50 EMA.
Now, the current candle is in the form of a doji star that Magic explains in his latest analysis, means an evening star is a bearish reversal formation. Typically, he further states the bullish candle that rises before the doji starts gets completely erased on the other side of the doji. This means if the pattern plays out and the doji star is formed, next week we could erase all the gains that we have seen since the breakout of price above the weekly EMA.
As he shared previously, as we have been rejected at the top of a huge uptrend channel, now we can fall to the bottom of that channel that could take us to $4,100 and “potentially even lower.”
As shown in the chart, there is a big “nasty” red arrow that points at $4,060 and even lower at $3,750. This would mean next week Bitcoin could wipe out all the gains it made when it surged from $3,600 to $5,400. That is because, in order for the pattern to complete itself, there needs to be “powerful bearish” follow through on the reversal. Though Magic says, the pattern is not complete, it is set up perfectly to do just that.
In order to bring forward the potential downside risks, the analyst points out that even if we do see an “explosive” retracement back to the 200 EMA next week, that doesn't mean it would be the end of selling. As a matter of fact, evening star “often” produces several candles of “downward continuation” on the back of the pattern, so it remains to be seen how BTC price will play out.
“The weekly 50 EMA has stopped BTC dead in its tracks. From this point, the most likely direction we will traverse, is to the downside in the coming weeks.”