Bitcoin Price Pattern Suggests a Bounce May Be Coming

If past events are a guide, bitcoin could in for a recovery rally in the short-term.

The price swing formed what's termed a "Long-tailed doji" candle on the daily chart, which is usually taken to represent indecision in the marketplace.

Potentially more interesting is that throughout 2018, BTC has witnessed corrective rallies in the days following the creation of long-tailed candles.

As can be seen above, the cryptocurrency created a long-tailed candle on Feb. 6 and rallied to highs above $11,700 in the next two weeks.

On similar lines, a long-tailed candle on April 5 was followed by a rally to highs above $9,900 soon after - a pattern that was repeated in June and August.

Further, the low of the long-tailed candles has never been put to test on the following day.

The resultant corrective rallies each ended up creating a lower price high.

The historical pattern may not play out if prices find acceptance below the previous day's low of $5,188.

View BTC could revisit $6,000 in the next week or two, having charted a long-tailed daily candle alongside an oversold RSI in the last 48 hours.

Bitcoin chart image via Shutterstock; Charts by Trading View.