Bitcoin Bloody Monday Leads To Reversal Hammer

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In this episode of NewsBTC’s daily technical analysis videoswe examine a recent showing of bulls after a bloody Monday morning open in Bitcoin price action.

VIDEO: Bitcoin Price Analysis (BTCUSD): September 19, 2022

Last night we had the weekly close in Bitcoin priceand overnight there was a deep dive into the low $18K region. However, since it opened on Monday morning at 9am, prices have risen more than 5%, already leaving a long pit behind.

Bull Stop bears short with Hammer Time

Bitcoin price forms a hammer. A hammer is a type of bullish reversal signal in Japanese candlesticks that represents a large, sudden presence of bulls once a key price target is reached.

On daily timeframes, there isn’t that much major going on to confirm the signal. Price has touched the lower again Bollinger Bands where the reaction took place. The RSI suggests that the force behind the move was very weak despite the depth.

stochastic has also fallen to the oversold line. Staying above that leads to short-term rallies, but as you can see in the past, the price can fall right back down.

BTCUSD_2022-09-19_11-44-10

Despite the plunge, there wasn't much strength from bears | Source: BTCUSD on TradingView.com

Weakening Weekly Momentum May Be Ready to Reverse

Since today is the first day of the week, the weekly candle in Bitcoin is currently also a hammer. With just a few days to go before the closure, it’s unlikely it will stay that way. The head of the hammer, or real candle bodyhovers just above the former all-time high resistance.

If you zoom in closely, you can see why this move was especially demoralizing for bulls. All traders who entered lever will have stopped after months of position building, leaving only those who came in on the wick with $17,500 in a long position.

Given the macro situation and extreme bearish sentiment, new lows appear to be a given. However, bearish momentum has weakened on weekly time frames, which is a bullish signal to go with a hammer candle. If bulls can close the weekly histogram in the green and complete a bullish crossover on the LMACDan ongoing rally could materialize.

If we compare it to the bottom of the 2018 bear market, once crossed, Bitcoin never returned to those prices.

BTCUSD_2022-09-19_11-39-46

Bears expose weakness on weekly timeframes | Source: BTCUSD on TradingView.com

Related reading: WATCH: Ethereum Merge Sell the News Event | ETHUSD September 15, 2022

Why Bitcoin Bulls Have 11 Days To Save September

There are only 11 days left in the monthly candle, and this is all the time bulls have left to avoid a much deeper sell-off in BTC.

While the current candle looks ugly, compare it to previous levels where a meaningful reversal started. A doji pattern Closing out September could be the start of a cluster of support building telling the market that there will be no new lows.

It is up to bulls to put on a strong show within the next 11 days to halt the bearish momentum on monthly timeframes. In the past, the histogram turning pink was the turning point that informed the market that bulls were taking back control of crypto.

How will September end?

BTCUSD_2022-09-19_11-42-22

Can bulls finally stop bearish momentum? | Source: BTCUSD on TradingView.com

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Featured image from iStockPhoto, Charts from TradingView.com

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