Bitcoin Forms Bullish Reversal Bar At Key Support Level
Deron Wagner | Apr 20, 2022 12:52AM ET
Bitcoin recently formed a bullish reversal pattern at key support, triggering our buy signal for a low-risk crypto swing trade entry. Here’s a quick walk-through of the buy setup.
In last week’s report, we said to keep an eye on Bitcoin (BTC) as it tested the 50-day moving average.
Later that day, BTC confirmed the breakdown below the 50-day MA with a move down to 39,200 before finding short-term support.
After a small bounce and several days of tight price consolidation, BTC undercut support of its Apr. 11 swing low, falling to a low of 38,500 (on Apr. 18).
However, buyers quickly stepped in and volume started surging, powering BTC back above the key psychological support level of 40,000 once again.
This price action created an important bullish reversal pattern on BTC's daily chart.
When an up-trending crypto has a multi-week pullback and then forms a bullish reversal bar, it often marks a significant low of the pullback.
In this case, the bullish reversal bar also coincided with an undercut of the uptrend line off the January 2022 low.
The daily chart of BTC below shows the undercut and bullish reversal at key support:
Per our Apr. 18 trade alert, we bought BTC in the portfolio at 40,280 due to the bullish reversal on higher volume. Our stop is neatly placed just below the low of that reversal bar, as we would not want to see the price violate that level now.
Overall, we like the positive risk-reward ratio for this crypto swing trade into the King of Crypto!
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