According to one analyst, Bitcoin’s chart could see a very “interesting monthly candle” in late August, which could signal a potential trend reversal.
But some experts warn that the month is not over yet and fundamentals are likely to have a bigger impact on market movements.
In an August 26 post, analyst HODL15Capital observed that this was “probably the most interesting monthly candle in Bitcoin history.”
The analyst noted a potential “Dragonfly Doji” Japanese candlestick formation on the monthly time frame chart.
BTC Monthly Candle Formation. Source: HODL15 Capital
The Dragonfly Doji is a candlestick pattern that indicates the possibility of price declines or increases based on past price movements.
In an interview with Cointelegraph, FXPro senior analyst Alex Kuptsikevich said the dragonfly formation on Bitcoin (BTC)’s monthly chart reflects optimism about a recovery following the failure earlier this month, adding:
“Potentially this signals a reversal of the negative trend we have seen since the all-time high in March.”
However, he cautioned that it is important to remember that the month is not over yet, and confirming the pattern formation is not entirely accurate.
“We saw a bullish resurgence in Bitcoin earlier this month after the sharp sell-off as BTC formed a dragonfly pattern on the weekly timeframe,” Kuptsikevich said.
However, he warned that BTC “has been in a broad downtrend channel since March and there are several technical hurdles to moving up.”
“Only when we break above $68,000 will we be able to talk about a breakout of the downtrend.”
The analyst said a second break above the all-time high of around $74,000 would push the asset “into uncharted territory for its price, with a potential run to the $110,000 level.”
However, he warned that Bitcoin could enter a prolonged period of consolidation before a major rally.
Meanwhile, Apollo Crypto analyst Henrik Andersson is not convinced by the technical signals, arguing that “fundamentals and sentiment drive the market.”
He told Cointelegraph that the past few months have been driven by German government selloffs and Mt. Gox’s BTC distribution. He predicted that the U.S. Federal Reserve’s interest rate decisions and the U.S. elections will have an impact on the market going forward.
“In the short to medium term, it is likely to be driven by interest rate cuts and election expectations.”
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As of August 27th, when this article was written, the BTC price was down 1.2% and trading at $63,150.
According to TradingView, this caused the Dragonfly Doji to turn into a Hammer candlestick on the monthly timeframe.
However, the hammer pattern is also known as a bullish reversal pattern that appears at the bottom of a downtrend.
BTC monthly chart. Source: TradingView
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