Sensorium (SENSO) / BTC - A rewarding candlestick patternThe pattern of candles highlighted is a favourite of mine. You don’t often see such a clear example in the charts, but when you do..
If you’re new to trading / active investing, this is one to put in your notebook. No matter the chart study, stocks, crypto, price of fish cakes in Hong Kong, it works every time on all time scales, the weekly is partially powerful.
On the above weekly chart a battle of psychology between bears and bulls is playing out. Why is this pattern significant?
Candle by candle starting from ‘1st candle’
1) The bears stepped in, they pushed price down closing the week lower than it began with significant pressure, hence red candle.
2) The bears stepped in again and closed price action lower than the week began. But two things have changed from the previous week:
2a) The wick is lower, indicating sellers are weakening.
2b) The body of the candle is thinner. This tells that despite all the selling pressure of the bears, the bulls matched it.
3) At this point you start to see something significant. A very thin body with a long wick above. This candle is called a ‘morning star’ and is confirmed with a ‘green candle’ in the following trading session, which we have. The psychology here is the bulls entered deep into the bears territory with not as much resistance as the previous session.
4) The first green candle. A ‘indecision candle’. The bears are confirmed ‘exhausted’, bulls closed price action higher than the previous trading session.
5) This is where is becomes mega interesting. The buying pressure soaking up the bears sell orders has not gone away. So what happens next when the bulls step in again without the selling pressure? Kaboom.
Print it out and hang it up somewhere!
WW
Is there any examples? Sure:
Here is a weekly dollar chart on something called Dragonchain:
And again the AAVA dollar chart before going on a 200000% bull run.
