Is the huge cross star on the second day of the daily limit a signal to sell?

A huge cross star on the second day after a daily limit in crypto may signal market indecision and potential reversal, especially with high volume and confirming indicators.

Jun 27, 2025 at 01:36 am

What Is a Huge Cross Star on the Second Day of the Daily Limit?

In technical analysis within the cryptocurrency market, a huge cross star refers to a candlestick pattern that appears after a coin or token has experienced a daily limit (either up or down). This candlestick typically has a small body with long upper and lower shadows, indicating indecision in the market. When this occurs specifically on the second day following a daily limit, it raises questions among traders about whether this is a reversal signal.

The daily limit, especially in certain exchanges where price movement is capped per trading session, can lead to delayed price discovery. After hitting the limit, the next few days often see volatile reactions. A huge cross star appearing on the second day might suggest that the momentum from the previous day’s surge or drop is weakening.

Why Does the Timing of the Cross Star Matter?

Timing plays a crucial role in interpreting candlestick patterns. The fact that the cross star forms on the second day after the daily limit rather than immediately afterward adds significance to its interpretation. It implies that the market had time to process the initial price shock and that buying or selling pressure may be subsiding.

This delay can also mean that large players have already taken positions during the locked limit period, and now retail traders are reacting. If the second-day cross star appears after an uptrend limited by a daily cap, it could indicate profit-taking or hesitation from buyers. Conversely, if it follows a sharp downtrend halted by a daily limit, it might show some stabilization attempts by buyers.

How to Interpret Volume Alongside the Cross Star Pattern

Volume is a key component when analyzing the reliability of any candlestick pattern, including the huge cross star. In the context of cryptocurrencies, which often experience high volatility and irregular volume spikes, understanding the relationship between price action and volume becomes even more critical.

• If the volume is significantly higher than average during the formation of the cross star, it suggests strong participation and possibly a meaningful reversal.
• If the volume remains low, it might imply that the pattern lacks conviction and should not be relied upon as a strong sell signal.

Traders should compare the volume of the cross star day with the average volume over the past 10–20 days. Additionally, they should look at the volume during the daily limit itself, as sometimes the real battle happens during the locked session when orders queue up.

Technical Indicators That Can Confirm the Signal

Relying solely on candlestick patterns can be risky, especially in the unpredictable crypto market. Therefore, combining the huge cross star on the second day with other technical indicators enhances decision-making accuracy.

• Relative Strength Index (RSI): If RSI is above 70 and starts to decline while the cross star forms, it may confirm overbought conditions and an upcoming pullback.
• Moving Averages: A bearish crossover (e.g., when the 9-period MA crosses below the 21-period MA) around the same time as the cross star strengthens the case for a sell signal.
• MACD: A divergence between MACD and price action — such as the price making new highs but MACD failing to do so — can reinforce the idea of weakening momentum.

These tools help filter out false signals and provide a clearer picture of whether the cross star is a genuine reversal indicator or just a temporary consolidation phase.

Real-World Examples in Cryptocurrency Markets

Examining historical charts of major cryptocurrencies like Bitcoin, Ethereum, and Binance Coin reveals multiple instances where a huge cross star formed on the second day after a daily limit, followed by either a reversal or continuation.

For example, during late 2023, Ethereum experienced a daily limit upward movement due to positive news around ETF approvals. On the second day, a large cross star appeared with elevated volume. Shortly after, the price corrected downward, confirming the reversal suggested by the pattern.

Another instance occurred with Solana in early 2024, where a steep drop hit the daily limit down. Two days later, a wide-range cross star emerged. However, the lack of significant volume and subsequent breakdown signaled further weakness, supporting the sell signal.

Such examples illustrate how important it is to analyze each situation in context, considering both price structure and broader market sentiment.

Psychological Factors Behind the Cross Star Formation

Understanding the psychology behind the huge cross star on the second day of the daily limit is essential for accurate interpretation. During a daily limit, especially on exchanges with circuit breakers, many traders cannot execute trades until the next session. This creates pent-up demand or supply.

When the market reopens, emotions run high. Bulls push prices higher immediately after an up-limit, but on the second day, uncertainty creeps in. The huge cross star represents this psychological tug-of-war — neither buyers nor sellers can take control.

This indecision often precedes a correction or consolidation phase. Traders who bought aggressively during or right after the limit may start booking profits. Meanwhile, those waiting for dips might hesitate due to unclear direction.

Frequently Asked Questions

Q: Can a huge cross star appear after a daily limit down and still be a buy signal?

A: Yes, depending on the context. If a huge cross star forms after a daily limit down, especially with increasing volume and bullish divergence in indicators like RSI or MACD, it could signal a potential reversal and serve as a buy opportunity.

Q: Should I always sell when I see a cross star on the second day?

A: No. Always combine the candlestick pattern with other technical tools and assess the broader market environment. Selling based solely on this pattern without confirmation can lead to missed opportunities or premature exits.

Q: Are there differences in interpreting this pattern across various exchanges?

A: Yes. Exchanges with different daily limit percentages, liquidity levels, and trading hours can affect how reliable the pattern is. Higher liquidity exchanges tend to offer more trustworthy signals compared to smaller ones with erratic volume.

Q: What if the cross star appears on the third day instead of the second?

A: The timing of the pattern matters. A cross star on the third day might still be relevant but loses some of its predictive power since the immediate reaction window has passed. Traders should reassess support/resistance levels and adjust their strategy accordingly.