Bitcoin Forms a Three White Soldiers Pattern

After a failed assassination attempt on Donald trump that left one supporter dead occurred on Saturday Bitcoin has experienced a notable rally over the three days that followed. The three daily candles (Saturday, Sunday, Monday) have formed a strong bullish reversal pattern known as “Three White Soldiers.”

The Three White Soldiers candlestick pattern is a powerful indicator in technical analysis, particularly in its ability to signal the exhaustion of selling pressure in financial markets. This pattern, characterized by three consecutive bullish candlesticks with progressively higher closes, often emerges at the end of a downtrend, signaling a potential reversal in market sentiment and price direction.

To understand how the Three White Soldiers pattern demonstrates the exhaustion of selling pressure, one must first consider the context in which it appears. Typically, this pattern follows a period of sustained downward price movement, where sellers have been in control, consistently pushing prices lower. As the downtrend matures, the selling pressure may begin to wane, initially appearing as a gradual shift in price action. This might be observed through smaller bearish candles or isolated bullish candles appearing amidst the downtrend.

The formation of the Three White Soldiers pattern itself is a strong indication that the tide is turning. The appearance of three consecutive strong bullish candles suggests that buyers are now able to overcome the selling pressure that previously dominated the market. Each candle in the pattern opens near the close of the previous one and closes higher, demonstrating that despite potential selling at the open of each session, buyers are strong enough to push prices up and close near the highs. This consistent upward movement implies that all sell orders are being absorbed by eager buyers, a key indicator of selling pressure exhaustion.

Volume often plays a corroborating role in this scenario. As selling pressure exhausts, trading volume during the latter part of the downtrend may decrease. However, as the Three White Soldiers pattern forms, volume may increase, indicating renewed buying interest and further confirming the shift in market dynamics.

The psychological aspect of this pattern is also significant. As prices rise over three consecutive periods, bearish traders may begin to close their short positions, a process known as “buying to cover.” This action adds to the upward pressure on prices and further evidences the exhaustion of selling sentiment in the market.

Another telling feature of the Three White Soldiers pattern is the lack of significant upper shadows on the candlesticks. Small or absent upper shadows indicate that prices closed near their highs, suggesting minimal selling pressure even at elevated price levels. This is yet another sign that sellers have largely exhausted their momentum.

In some instances, the first candle of the Three White Soldiers pattern might represent a capitulation event, where the final wave of sellers exits the market, leaving primarily buyers to dictate subsequent price action. This capitulation can mark a definitive end to the previous downtrend and the beginning of a new bullish phase.

The pattern coincides with Bitcoin breaking back above the 200-day simple moving average as it now sits beneath the 50 and 100-day moving averages at around $64,000. The connection between Bitcoin and Donald Trump has been steadily increasing as of late as the candidate has been trying to sway cryptocurrency users in the United States. So much so that he has been taken on as the headliner of the 2024 Bitcoin conference that is to be held in Nashville, Tennessee later this month.

While the independent candidate John F. Kennedy the second has already been a strong supporter of Bitcoin and will also be speaking at the 2024 Bitcoin conference, sadly the American democracy consists of only two choices (republican or democrat).

Other bullish tailwinds that helped to propel Bitcoin higher include the German government no longer selling large amounts of Bitcoin as they had run out of Bitcoin to sell. In total they had sold almost 50,000 BTC in less than a month.

Miner revenue has just risen to the fairly paid level, up from the extremely underpaid level they had been sitting at for the last month.

Hopefully this will put an end to the offloading of Bitcoin from mining companies that has been prevalent since late April.

The “Three White Soldiers” appearance on Bitcoin’s daily chart is a promising signal that Bitcoin will continue to higher pricing and may indeed prove that Bitcoin did in fact hit a bottom at $53,000.

Originally published at https://thegoldforecast.com.