Bitcoin’s Candlestick Pattern Signals Potential Trend Reversal, Say Analysts

Bitcoin’s monthly chart pattern for August could offer key insights into where the market is heading next, according to analysts.

On August 26, analyst HODL15Capital noted in an X post that the monthly candle forming on Bitcoin’s chart might be one of the most intriguing in its history. The current candle resembles a “dragonfly doji” pattern on the monthly timeframe, a candlestick pattern that often signals a possible price reversal in either direction, depending on prior trends.

FXPro senior analyst Alex Kuptsikevich shared that the dragonfly doji suggests optimism for a market recovery following a challenging start to August. He stated, “This could signal a reversal of the downtrend we’ve seen since the March all-time high,” but cautioned against confirming the pattern before the month ends.

Kuptsikevich pointed out that Bitcoin had shown strength earlier in August after a sharp decline, when a dragonfly pattern also formed on the weekly chart. Despite this, he warned that Bitcoin faces multiple technical hurdles in its upward movement, remaining in a broad downward channel since March.

“Only a move above $68,000 would signal a break in the downtrend,” he said, further adding that another push past the all-time high of $74,000 could propel Bitcoin into uncharted price territory, with potential growth toward $110,000. However, he cautioned that Bitcoin could also enter a period of extended consolidation before any significant move upward.

Meanwhile, Apollo Crypto analyst Henrik Andersson downplayed the importance of technical signals, arguing that fundamentals and sentiment are currently driving the market. He noted that factors such as the German government’s Bitcoin sales, Mt. Gox BTC distributions, U.S. Federal Reserve rate decisions, and the upcoming U.S. elections will be the key drivers of the market in the short to medium term.

As of August 27, Bitcoin prices had dropped 1.2%, trading around $63,150. TradingView reported that this has shifted the dragonfly doji to a hammer candlestick on the monthly chart, a pattern also known for indicating potential bullish reversals at the bottom of a downtrend.