A strong weekly bullish candle could indicate further momentum higher. A combination of bullish candlestick patterns has formed on the weekly chart.


Bitcoin’s Weekly Candle


The continuation of Bitcoin’s trading range with the bullish pennant continues. If you look at the image above, you’ll see the current weekly candle is a large green candlestick, with a wick approaching 1/3rd of the entire range of the weekly candle. Current, this candlestick remains bullish. But it will require Bitcoin to maintain a level above or at $10,500. What is more interesting about this current weekly candlestick isn’t the price level, but the current range of this weekly candlestick in relation to the two prior weekly candles. There is a three candlestick pattern known as a bullish pivot setup. This is a powerful signal that gives a high probability of the direction price may go. The three candlestick pattern involves the current week and the candles of the most recent two weeks: the week of August 19th and the week of August 26th.

A bullish pivot setup occurs when the middle candlestick (week of August 26th) has a lower high and a lower low than the two outside candlesticks, which is exactly what we presently see on Bitcoin’s weekly chart. There are two other bullish chart patterns that this setup could be called. Some analysts may consider this setup to also be a morning star pattern. A morning star pattern is a bullish reversal signal involving three candlesticks. The second candle should show a continuation south – but the third candle should reverse and close above the second session and, ideally, close above the first candlestick. The second – and most likely – pattern that we could identify is the mat hold pattern (or the rising three method). This pattern has one of the highest percentage probabilities of turning bullish. According to Bulkowski and Thomsett, this pattern will continue a prior bull move 4 out of 5 times. This pattern is a four-bar pattern where the second and third candlesticks open above the prior candlestick close but then close below the prior candlestick close. The fourth candle then shows a strong bullish reversal, closing above the third candlestick – ideally, we would see it close above both the second and third candle. And if nothing changes between Saturday and Monday afternoon, then we will see this extremely bullish ‘mat hold’ pattern fulfilled.

Given the bullish continuation pattern that Bitcoin continues to trade in, along with the fact it is now within the final 1/3rd of the bullish pennant, there is a high probability we see this market move higher. Not shown is the weekly RSI and %B indicators who are both sloping higher. Another condition not shown is the shared relationship between the %B on the daily and weekly charts. On both the weekly and daily charts, the %B is very, very close to crossing the 0.7 level. A cross of that level is a strong bullish entry signal and given that the RSI is in neutral territory on the daily chart, we could observe a sustained breakout higher that lasts for over 60 trading days.