📊 6 Examples of Rejections at S/R Areas📍Support and Resistance 101
Support and resistance are two foundational concepts in technical analysis. Understanding what these terms mean and their practical application is essential to correctly reading price charts. Prices move because of supply and demand. When demand is greater than supply, prices rise. When supply is greater than demand, prices fall. Sometimes, prices will move sideways as both supply and demand are in equilibrium. Like many concepts in technical analysis, the explanation and rationale behind technical concepts are relatively easy, but mastery in their application often takes years of practice. S/R level areas can develop inside different candlestick patterns as well as trend trading patterns. The Resistance being the top of the pattern and the support being the bottom of it.
🔹Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favor a pause or reversal of a prevailing trend.
🔹Support occurs where a downtrend is expected to pause due to a concentration of demand.
🔹Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.
🔹Market psychology plays a major role as traders and investors remember the past and react to changing conditions to anticipate future market movement.
🔹Support and resistance areas can be identified on charts using trendlines and moving averages as well as different types of patterns.
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Support and Resistance
How to Measure the Strength of a Candlestick?
Hey traders,
There are multiple different ways to measure the strength of the market reversal from a key level:
✔️some traders apply volumes and look for its sudden spike as a confirmation,
✔️some traders rely on some indicators and look for a particular trigger there as the signal,
✔️some traders, like me, follow the candlesticks and make their judgments based on the candle's strength.
In this article, I prepared for you a candlestick strength meter that will help you to accurately spot the reversal clues.
❗️Remember about the important precondition:
that candlestick meter is reliable being applied ONLY on key levels.
Trading that outside key levels is not recommendable.
📈The initial touch of a key level is very telling:
after a sharp bullish / bearish rally to key resistance/support the reaction of the price on that can indicate you the strength of the identified level.
There are three main classifications of the reversal candle momentum:
*by reversal candle we mean the first bullish candle on key support or the first bearish candle on key resistance.
1️⃣The momentum will be considered to be low in case if the reversal candle will close within the range of the previous candle.
It indicates the weakness of bulls buying from support / bears selling from resistance.
You should patiently WAIT for some other signal before you open the trade.
2️⃣The momentum will be considered to be medium in case if the reversal candle will engulf the range of the previous candle.
It shows quite a strong initial reaction being sufficient to open the trade ONLY in a strict combination with some other signal.
3️⃣The momentum will be considered to be high in case if the reversal candle engulfs the range of the last two candles (two bearish or two bullish ).
By itself, it is considered to be a strong reversal signal.
The trading position can be opened just based on such a candle.
Among the dozens of different candlestick pattern formations, I believe that momentum candles are one of the most reliable in spotting the market reversal.
Learn to spot these candles and you will be surprised how accurate they are.
What candlestick pattern formations do you want to learn in the next post?🤓
Let me know, traders, what do you want to learn in the next educational post?
$BTCUSD SOPR, BFX Longs and Shorts, Greed, Liquidations.
This is one of the multi-chart evolving dashboards I use daily for crypto trading. This dashboard attempts to distill a broad scope of data and sentiment into glance value charts. The goal with such dashboards is to seek to stack probabilities to be on the right side of the percentages in every trade.
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The top panel chart shows the SOPR (Spent Output Profit Ratio, (grey line, using the symbol $BTC_SOPR) overlay vs $BTCUSDT (Binance, in blue). The SOPR is a very simple indicator. It is the spent outputs expressed as a ratio and shown as an oscillator on the chart. The Bitcoin SOPR is the realised dollar value divided by the dollar value at creation of the output. Or simply: price sold divided by price paid.
SOPR showing under value 1 means that the on chain data has recorded a net realised loss for "spent" Bitcoin. SOPR showing over value 1 means net profit. Renato Shirakashi appears to be the inventor of SOPR for BTC, and he writes about SOPR: "In this analysis two important psychological turning points that significantly change the supply of bitcoin are going to be described by introducing a new oscillating indicator that signals when these major supply changes occur, using blockchain data." I interpret this reference to the psychology of "weak hands" getting flushed out of the market by selling at a loss as shown when SOPR sits below 1 for extended periods of time (bear), and when all the weak hands have left the market, we find a bottom.
Because I am an impatient learner, I needed further examples to understand fully. If someone sells you 1 Bitcoin at $50,000USD, that transaction is recorded on the blockchain. If you then sell it for $25,000USD, that is now a spent output which is obviously a negative 0.5 ratio, and would contribute to a SOPR lower than the value 1. Interestingly the SOPR tends to be very close to the value 1 nearly always. Which means that the aggregated data of all spent outputs is nowhere near as extreme as the example I gave (although I'm sure there are plenty of retail traders who bought the high and sold the bottom at a 50% loss).
If we rewind to extended periods of low points in the SOPR ratio, extended negative ratio periods coincide with low points. In the past 5 years the lowest ratio was around 0.88, which was December 2018, when the price of Bitcoin was heading lower than $4k USD. That particularly brutal bear market lasted 18 months and you can see that the SOPR was below value 1 for nearly the entire time, indicating that there was a long tail of weak hands realising losses the entire time.
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Also present on the top chart is a brilliant little free indicator called Liq.Levels , wtf is all I can say, this a masterpiece of long/short liquidation data based on market maker behaviour in this case Binance's perpetual BTC/USDT leveraged futures (one of the most active retail leverage platforms). On this layout I have hidden all but the 25x liquidation points both short and long as it captures the widest spread and for the simplest visual as this is a glance-dashboard, on a single panel layout you can view the 50x and 100x which are tighter spreads. Liq.Levels also filters for a minimum of one million USD, so this is real value the market makers are getting out of bed for, essentially these levels are where the market maker really wants to push the price to. If you're new to leverage (don't do it! just buy at spot!), the reason they do this is to hunt the longs and the shorts and cause maximum liquidations (are you still trading with leverage?!).
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The second panel is the famous Bitfinex Longs (green) and Shorts (red) . You can see currently the longs, since around the $39000 level went parabolic. The shorts are just tiny in comparison. The data from Bitfinex seems less erratic than those from other exchanges, so if you find looking at longs and shorts ratios useful, I'd suggest also looking at other websites to see the other major exchange long and short activity, liquidations, and ratios.
This info is used to monitor large moves by leveraged traders. While Bitfinex is not the best measure here (ideally you would want all major exchanges aggregated longs vs shorts, but I have not found such indicators on TV, only Bitfinex), you can check the data by comparing it to another exchange, for example Binance you can see that parabolic move the Longs made from the 11th of July to around the 14th of July (while the BTC price fell off a cliff from $30k to $20k), where the ratio of Longs vs Shorts on Binance also skewed heavily to the Long side.
This is another way to stack a probability. As the Longs level off and get flushed out (usually by mass liquidation!), this is another variable to find support or resistance. For example you can see the levelling off around 12 May 2022, Bitcoin's price found a short term bottom at $29k. Similarly and most recently you can see as the Longs levelled off from a hectic run up in the mid June 2022 selloff, the price found a short term bottom around $20k. You could say that recently or commonly this is a contrarian indicator, assuming that smart money is seeking to liquidate the maximum possible leveraged positions, so we can assume that generally these leveraged retail traders will largely make incorrect bets most of the time, hence historically as soon as Shorts leave the market, the price spikes up, and vice versa. So, another thing to watch.
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Next we have a Crypto Fear & Greed Index , which as you can see nearly always oscillates in a tight rhythm with Bitcoin's price action. Above 75 (green dotted line) is extreme greed, below 25 (red dotted line) extreme fear. There are quite a few websites that attempt to measure crypto Fear & Greed, and even a variety of different indicators on TradingView, but this was the clearest visually I could find here. The inputs on this version according to the coder are stable coin flows (flight to safety), coin momentum (top 18 coin price relative to 30 day averages), and top 18 coin price high over the previous 90 days. So, it's interesting that despite this being at face value a rather complicated set of data with many inputs, that it just looks like a carbon copy of the Bitcoin chart. Bitcoin has a gravity that is inescapable for all things crypto right now.
The difference between looking at this indicator and simply looking at Bitcoin's chart is that it flattens out the action and has a set floor and a ceiling. You can see historically that the best buy times were when fear was at its "height" (where the yellow line is at its lowest). Another way to stack probabilities. At time of writing, is this a great time to buy? Fear appears to be leaving the market, we haven't had a commensurate price move up, so I'd be cautious. Like all these indicators, you can just overlay Bitcoin's price line and backtest the correlation in a few seconds. Buying when fear is at a maximum is usually easier said than done, though!
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Lastly we have Liquidations by Volume , as per the coder this "shows actual liquidations on a per-candle basis by using the difference in volume between spot and futures markets." Blue line is futures volumes, yellow are spot volumes. The code for this indicator shows that it is the same BTCUSDT Perpetual Future's contract from Binance that we have in the Liq.Levels indicator, perfect.
Worth noting is that the community of coders at TradingView is a trader's dream. These sorts of customisable dashboards you can build are high value. Having worked for the largest international institutions I find many of these indicators are institutional grade and they have just a few hundred users sometimes, pretty crazy how early in the adoption curve we are with this. If you haven't experienced the "other side" of trading, compared to regular equities forex futures etc the TradingView tools and the crypto data and exchanges are just lightyears ahead.
Back to why look at liquidations? As institutions come into the market, and retail wallets on exchanges like Binance and many others continue to use leverage, the action in the derivative (in this case $BTCUSDTPERP) can and often does drive the price of the underlying. Market makers hunt the maximum liquidations, always. The market context is highly relevant here. During volatile periods it is a swinging contrarian indicator. If there has been massive green bars showing short liquidations pushing the price up, then we could be forming/hitting resistance levels and can see reversal/selloffs, and vice versa if there are massive red bars showing long liquidations pushing the price down, this can be hammering out support levels and we look to bounce. The longs and the shorts really do seem to be taking turns getting liquidated right now.
Also of relevance is the price action relative to the liquidations. Obviously if an institutional candle pushes the price up or down, there will be mass liquidations. But another scenario that occurs is when are light volumes on the derivatives such as $BTCUSDTPERP we have under the microscope here, but we have large Bitcoin price movements, then the reasons for the move can be understood differently, and we can use this and other contexts to draw conclusions such as for example a scenario where price goes up with light liquidations and derivative action, which could be interpreted as much stronger hands holding coins rather than simply margin calls.
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Good luck!
TommyXAU Educational - What i mean by clean rangeGood afternoon gold gang, hope you're having a good weekend.
I thought id hop on to share with you a piece of information of what i mean by clean range. Ok ..
Say you have 2 key levels in price .. we have had a big news event causing a big red candle to the left hand side. This has left what is called an imbalance. An imbalance is where the wicks of the previous and after candle don't meet. Backtest that one yourself and see how many times these imbalances get filled.
Price is coming back up and closes above the key level .. it is now a high probability that price will come up and fill that imbalance and the clean range.
I call it clean as there is no traffic or hurdles that should stop price on its way up. Again, adding to the probability.
Simple as that really guys ..
Please leave a like if it was of any help to you and ill see you this evening for market open!
TommyXAU
FRC value plunged below $1 billion for the first timeFirst Republic Bank's (FRC) market value plunged below HKEX:1 billion for the first time ever on Wednesday after a report said the U.S. government was unwilling to intervene in the rescue process, hammering the lender's stock.
After a brutal selloff, the bank's market capitalization was about FWB:886 million at its lowest on Wednesday, a far cry from its peak of more than HKEX:40 billion in November 2021.
U.S. government officials are currently unwilling to intervene in the First Republic rescue process, CNBC reported, citing sources.
The bank has been looking at several options, such as selling assets or the creation of a "bad bank", a source familiar with the matter told Reuters on Tuesday.
The bad bank possibility is a crisis-type method of isolating financial assets that have problems.
Trading in First Republic's shares was halted multiple times. The stock was last down nearly 30% at $5.66.
However, analysts have highlighted several roadblocks which could complicate rescue efforts for the San Francisco-based lender as it looks to emerge out of the crisis sparked by an outflow of more than $100 billion in deposits in the first quarter.
"The (First Republic) assets will be sold, but it may take some time and could be sold at a pretty severe discount to par," David Wagner, portfolio manager at Aptus Capital Advisors, said.
At least three brokerages have cut their price targets on First Republic's shares since it reported first-quarter earnings on Monday.
"First Republic's problems are likely idiosyncratic ... and they obviously have a painful path in front of them," Art Hogan, chief market strategist at B Riley Wealth in Boston, said.
A string of earnings reports from regional banks last week had reassured investors, but the banking sector has come under renewed pressure following First Republic's results.
The KBW Regional Banking Index (.KRX) has lost 4.4% so far this week.
Trading With RSI Part 1: Tops & Bottoms, Support & ResistanceRelative Strength Index (RSI) is a popular technical indicator used by traders to identify overbought and oversold market conditions. It oscillates between 0 and 100, with readings above 70 indicating an overbought market and readings below 30 indicating an oversold market. Trading using the tops and bottoms of RSI is a popular strategy that involves identifying key levels of resistance and support. In technical analysis, support and resistance are key concepts used to identify potential buying and selling opportunities. Support levels are areas where the price tends to find support as it falls, while resistance levels are areas where the price tends to find resistance as it rises. The Relative Strength Index (RSI) can be used to identify support and resistance levels by analyzing the overbought and oversold readings on the indicator.
The first step in using RSI to trade is to identify the trend. A trader can do this by analyzing the price chart and looking for higher highs and higher lows in an uptrend or lower highs and lower lows in a downtrend. Once the trend has been identified, the trader can look for key levels of resistance and support on the RSI indicator.
When the RSI is in overbought territory (above 70), it indicates that the market may be due for a correction. A trader can look for a bearish divergence between the RSI and the price chart to confirm this. This occurs when the RSI forms a lower high while the price chart forms a higher high. This is a signal that the upward momentum is weakening, and a reversal may be imminent.
Conversely, when the RSI is in oversold territory (below 30), it indicates that the market may be due for a rebound. A trader can look for a bullish divergence between the RSI and the price chart to confirm this. This occurs when the RSI forms a higher low while the price chart forms a lower low. This is a signal that the downward momentum is weakening, and a reversal may be imminent.
Traders can use the tops and bottoms of RSI to set entry and exit points for their trades. For example, a trader may enter a short position when the RSI reaches 70 and exit when it falls to 30. Conversely, a trader may enter a long position when the RSI reaches 30 and exit when it rises to 70. It's important to remember that no strategy is foolproof, and traders should always use risk management techniques such as stop-loss orders to minimize their losses.
In addition to using the overbought and oversold readings and divergences, traders can also use the RSI to identify key levels of support and resistance by analyzing the chart patterns. For example, if the RSI forms a double top or double bottom, it may indicate a potential reversal. If the RSI forms a trendline, it can be used to identify potential support and resistance levels.
In summary, trading using the tops and bottoms of RSI is a popular strategy for identifying key levels of resistance and support in the market. Traders can use these levels to set entry and exit points for their trades, and can confirm their signals by looking for divergences between the RSI and the price chart. As with any strategy, traders should always use risk management techniques to minimize their losses.
Quick Guide to Understanding Support and ResistanceHello dear @TradingView community!
Have you ever heard of the concept of "support and resistance" in trading? It's actually one of the most widely used concepts in trading! However, it's interesting to note that everyone seems to have their own idea of how to measure support and resistance.
So, let's go back to basics. Imagine a zigzag pattern that's moving up - this is known as a "bull market." When the price moves up and then pulls back, the highest point reached before it pulled back becomes resistance. Resistance levels indicate where there will be a surplus of sellers.
On the other hand, when the price continues up again, the lowest point reached before it started back is now support. Support levels indicate where there will be a surplus of buyers. In this way, resistance and support are continually formed as the price moves up and down over time.
You might be wondering how to actually trade using support and resistance. One way is to "trade the bounce" - meaning to buy when the price falls towards support, and sell when the price rises towards resistance. Another way is to "trade the break" - buy when the price breaks up through resistance, and sell when the price breaks down through support.
But how do you know when support and resistance levels have actually been broken? It's important to note that support and resistance levels are not exact numbers. Often times, you will see a support or resistance level that appears broken, but soon after find out that the market was just testing it.
To filter out false breakouts, it's helpful to think of support and resistance more as "zones" rather than concrete numbers. One way to find these zones is to plot support and resistance on a line chart rather than a candlestick chart. This helps you focus on intentional movements of the market rather than its reflexes.
There are also some interesting tidbits about support and resistance - for example, when the price passes through resistance, that resistance could potentially become support.
And the more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support becomes.
So there you have it - a quick and easy guide to understanding support and resistance in crypto trading!
How to identify a TREND or RANGE market early in DaytradingTrading and Price Action can be broken down into tow simple terms...a 'range bound' market and a 'trend' market. Being able to identify the price action early is key to successful daytrading.
In the video I discuss how I like to daytrade Indexes and especially how I look to identify a RANGE or a TREND market. As there really is only TWO WAYs to trade....ie/ reversion to the mean or continuation trading...it is important to identify the market conditions early to get on the right side of the market and take full advantage of a move up or down.
I discuss my basic approach to trading and what I look for to identify the market conditions.
I talk about my trading style and general entry criteria.
Any comments or questions welcome below.
My Impulse Channeling techniques!If you find this info inspiring/helpful, please consider a boost and follow! Any questions or comments, please leave a comment!
Well they are not mine, just some techs
I use when dealing with impulses.
A bit of KCT.
A bit of Elliott wave and Elliot wave
All consistently used in my analysis.
If helpful, throw me some love and
I'll post some techs on channeling corrections.
Cheers!
RSI vs. Stochastic OscillatorRecently, I was asked to write an article about the differences between two popular technical indicators, the Relative Strength Index (RSI) and the Stochastic Oscillator. As someone who has utilized both indicators in my trading journey, I was excited to share my insights and help others better understand these powerful tools. In this article, we will delve into the purposes, advantages, and disadvantages of the RSI and Stochastic Oscillator, as well as explore their effectiveness on different instruments and how they can be combined with other indicators for optimal trading results. Let's dive in!
1. Calculation method:
a. RSI: The RSI is calculated using the average gain and average loss over a specified period (usually 14). The formula is RSI = 100 - (100 / (1 + (Average Gain / Average Loss))). The RSI ranges from 0 to 100, with 30 and 70 as common thresholds for oversold and overbought levels, respectively.
b. Stochastic Oscillator: The Stochastic Oscillator compares the current closing price to the price range over a specified period (usually 14). It consists of two lines, %K and %D, with %K representing the raw Stochastic value and %D being a moving average of %K. The formula for %K is: %K = (Current Close - Lowest Low) / (Highest High - Lowest Low) x 100. The Stochastic Oscillator also ranges from 0 to 100, with 20 and 80 as common thresholds for oversold and overbought levels, respectively.
2. Sensitivity:
a. RSI: The RSI is generally less sensitive to price fluctuations, which can result in fewer false signals. However, it may not react as quickly to price changes as the Stochastic Oscillator.
b. Stochastic Oscillator: The Stochastic Oscillator is more sensitive to price fluctuations, which can provide earlier signals but also result in more false signals. Traders often use additional filtering techniques to reduce false signals, such as waiting for %D line crossovers or using other indicators for confirmation.
3. Performance in different market conditions:
a. RSI: The RSI works well in trending markets, as it can help identify potential trend reversals. However, it may produce false signals in range-bound markets or during strong trends.
b. Stochastic Oscillator: The Stochastic Oscillator performs well in both trending and range-bound markets, as it considers the price range in its calculation. This makes it more adaptable to different market conditions, although it may require additional confirmation from other indicators due to its sensitivity.
4. Application in trading strategies:
a. RSI: Traders often use the RSI as a standalone indicator or in combination with other indicators such as moving averages, Bollinger Bands, or MACD. The RSI can also be used to spot divergence, where the price makes new highs or lows, but the RSI fails to confirm them, signaling a potential trend reversal.
b. Stochastic Oscillator: The Stochastic Oscillator is often used with other indicators such as moving averages, MACD, or ADX to provide confirmation of trade signals. In addition, it can be used to spot divergence, similar to the RSI, as well as identify potential trend reversals through crossovers of the %K and %D lines.
In summary, while both the RSI and Stochastic Oscillator are used to identify overbought and oversold conditions, they differ in terms of calculation, sensitivity, performance in different market conditions, and application in trading strategies. Understanding these differences can help traders choose the most suitable indicator for their specific trading style and market conditions.
Tips to Help Demystify the RSIPrimary Chart: Tips to Help Demystify the RSI
Introduction to Momentum Indicators
Many indicators exist for technical analysis. And a number of them focus on momentum, which is distinguishable from other core technical concepts such as trend, support and resistance, volatility, and standard deviation. Momentum tools measure the velocity of a directional price move. Using a train as an analogy, momentum considers the speed, velocity and magnitude of the train's movement in a given direction, e.g., north or south. In a sense, it helps determine the strength and speed of the directional travel of the train.
By contrast, trend analysis considers whether a price move is consistently heading in a given direction. A trend can be valid despite corrective retracements, where price retraces a portion of the prior move, consolidates a portion of the prior move, and then resumes movement in the trend's direction. Using the same train analogy, trend analysis considers how effectively and persistently the train is moving in a given direction, such as north or south. Momentum, though, considers the train's speed and velocity in whatever direction the train is moving.
Many momentum indicators also are not limited to analyzing momentum and may have utility as a trend gauge as well. For example, Stochastics, MACD and RSI all have the additional capacity to help analyze trends.
Basic Concepts and Calculation of RSI
Created by J. Welles Wilder, the RSI is one of the most widely used and well-known momentum indicators. The acronym "RSI" means relative strength index. RSI should not be confused with the concept of relative strength, which compares one instrument or security against another to determine its outperformance or underperformance. Some other common momentum indicators that have been in use for many years include the Rate-of Change, Chande Momentum Oscillator, Stochastics, MACD, and CCI. Most momentum indicators, including RSI, share some conceptual aspects, such as overbought and oversold conditions and divergences, even though they may vary in the way they are calculated and interpreted.
Reviewing the way an indicator is calculated can sometimes help to sharpen one's understanding of it and interpret it more effectively. RSI's calculation is not as complex as some indicators. So reviewing its calculation remains an accessible exercise, but this is not essential to mastering the indicator. TradingView's RSI description contains a useful summary of how the indicator is calculated. See the Calculation section of the RSI description at this link: www.tradingview.com(close%2C%2014).
Another excellent description of how RSI is calculated may be found on this reputable technical-analysis website: school.stockcharts.com
To summarize, RSI's basic formula is as follows: RSI = 100 – (100 / 1 + RS), where RS = average gain / average loss.
Using the default lookback period of 14 (note that any lookback period can be selected), the calculation then proceeds to include 14 periods of data in the RS portion of the calculation (average gain / average loss). So the average gain over the past 14 periods is divided by the average loss over the past 14 periods to derive "RS," and then this RS value is plugged into the formula at the start of this paragraph. The subsequent calculations also have a lookback of 14 periods (using the default settings) but smooth the results.
Smoothing of these values then occurs by (1) multiplying the previous average gain by 13 and adding the current period's gain, if any, and dividing that sum by 14, and (2) multiplying the previous average loss by 13 and adding the current period's loss, if any, and dividing that sum by 14. If the lookback period is adjusted from the default of 14, then the formula and smoothing techniques will have to adjust for that different period.
In short, the calculation reveals that RSI's core function is to compare the size of recent gains against the size of recent losses and then normalize that result so the indicator's values may fluctuate between 0 to 100. Note that if a daily period is used, for example, the average day's gain is compared against the average day's loss over the lookback period selected. Similarly, if hours are used, the average hour's gain is compared against the average hour's loss over the relevant lookback period.
RSI can be used on any timeframe, including a 1-minute or 5-minute chart, and simply calculates its values based on the period to which the indicator is applied, based on a default using closing prices for the period specified. With TradingView's RSI indicator, traders have a great deal of flexibility in adjusting such defaults to some other preferred value, so the closing price need not be used—the default can be changed to the open, the high, the low, high+low/2, high+low+close/3, or several other options.
Interpreting RSI's Overbought and Oversold Signals
With some exceptions, the higher-probability RSI overbought (OB) and oversold (OS) signals align with the direction of the trend. The old trading adage remains valid for RSI as with other forms of technical analysis: the trend is your friend. In the chart below, consider the yellow circles flagging OS signals that could have been effective in the Nasdaq 100's uptrend in 2021.
Supplementary Chart A: Example of RSI OS Conditions That Align with an Uptrend and Key Support
As with other technical trade signals, countertrend setups should be avoided in the absence of overwhelming confirmation from other technical evidence. If a countertrend setup is traded, use extra caution and smaller position size. In this context, trading RSI signals against the trend means selling or entering a short or bearish position in an uptrend when an OB signal appears, or it means buying or entering bullish positions in a downtrend when an OS signal appears. It may also mean trading counter-trend positions as soon as RSI begins exiting an OB or OS zone.
Stated differently, trading overbought and oversold signals against the trend will likely result in mounting losses. Countertrend trades require much technical experience and significant trading expertise—and even the most experienced trading veterans and technical experts say that the counter-trend trades tend to be low probability setups. In short, never trade the RSI's OB and OS signals mechanically without considering any other technical evidence.
Supplementary Chart B: NDX OB Condition in an Uptrend
In the chart above, note how the Nasdaq 100 (NDX) reached a fairly high daily RSI reading of 77.17 on July 7, 2021. This chart shows an example of how even very high OB conditions can persist much longer than expected. RSI remained above 70 for over a trading week. And the ensuing pullback was not that significant, and it didn't reverse the uptrend at all. The risk-reward for mechanically trading this setup would have been poor, and stops would probably have been ignored at some point in the days following the signal. For an experienced trader with small position size, perhaps the second RSI peak immediately following the July 7, 2021 peak would have worked for a short-term trade given that a divergence arose (higher price high coinciding with a lower RSI high). But it would still have been a difficult trade requiring excellent timing and precision.
In summary, OB / OS signals should not be interpreted and traded mechanically. The trend and other technical evidence should always be considered. OB / OS signals work best when aligned with the direction of the trend on the relevant time frame. They also work best when taken at crucial support or resistance.
Consider several other tips and tricks when interpreting OB / OS signals on RSI.
1. The importance of an OB / OS signal depends not only on the context of the trend in which it arises but also on the time frame on which it appears and the lookback period used in its calculation. This is intuitive, but it helps to keep this in mind. For example, an OB / OS reading has a greater effect on the weekly or monthly chart than on the daily, and an OB / OS reading has a greater effect on daily chart than on the hourly or other intraday chart. Furthermore, if the RSI lookback period is set to 5 periods on a given time frame, the effect of an OB / OS reading will less significant than if the RSI lookback period is set to 14 (the default setting).
2. Consider past OB / OS readings for the same security or index being considered (using the same time frame for past and current OB / OS readings). Each security or index may have OB / OS levels that differ somewhat from other securities or indices. In addition, the OB / OS readings that are typical for a given a security, index or instrument may vary over time in different market environments. It may help to draw support or resistance lines on the RSI indicator within the same market environment and trend to determine what RSI OB / OS levels are typical. RSI support or resistance levels in an uptrend should not drawn to be applied and used in a downtrend for the same index or security.
Supplementary Chart C.1: RSI Support and Resistance Levels for NDX in 2021 on Daily Chart
Supplementary Chart C.2: Two RSI Downward Trendlines Drawn on BTC's Weekly Chart to Help Identify Resistance
3. Divergences can strengthen the effect of an OB / OS signal. Stated simply, a divergence occurs when the RSI and price are in conflict. For example, consider two or three subsequent higher highs in price that occur (this can happen in an uptrend or a bear rally or in a trading range). When price makes the second or third high, a divergence arises if RSI makes a lower high. Or consider two or three subsequent lower lows in price. When price makes the second or third lower low, a divergence arises if the RSI makes a higher low. A greater number of divergences presents a stronger signal than a lower number of divergences. And having divergences on multiple time frames can also be helpful. Finally, a divergence should not be traded until confirmation comes from price itself, i.e., a trendline or other support / resistance violation.
Supplementary Chart D: Example of RSI Bearish or Negative Divergence at NDX's All-Time High in November 2021
4. OB / OS signals also can be helpful in chop when they arise at the upper boundary of a well-defined trading range. In choppy trading ranges, one has a better trading edge at the edge. OB / OS signals that arise at the edge (at critical support / resistance) are the most useful. But depending on the trading strategy, setups in choppy trading ranges can be more difficult and lower probability than setups in strong trends.
Using RSI as a Trend-Analysis Tool
While primarily a momentum tool, the RSI has trend-analysis aspects. Because the RSI will likely remain in overbought (OB) or oversold (OS) for extended periods, it helps evaluate the strength and duration of price trends.
In an uptrend or bull market, the RSI (daily) tends to remain in the 40 to 90 range with the 35-50 zone acting as support. In a downtrend or bear market the RSI (daily) tends to stay between the 10 to 60 range with the 50-65 zone acting as resistance. These ranges will vary depending on the RSI settings, time frame, and the strength of the security or market’s underlying trend. As mentioned above, RSI readings will also vary from one security or index to another. They also vary in different market environments, e.g., a strong uptrend vs. a weak uptrend will have different OB / OS readings.
So the RSI can help confirm the trend when it moves within the RSI range that is typical of that security or index when trending. As a hypothetical example example, if a major index appears to be making higher highs and lower highs, respecting trendline and other key supports, and showing technical evidence of an uptrend, then RSI can help confirm this trend analysis by marking OS lows within the 35-50 range (perhaps 30 on a volatile pullback). RSI can also help time entries and exits when reaching the area that has been where RSI has found support in its current market environment.
The following points summarize how RSI tends to operate during trending price action:
During an uptrend, RSI will trend within the upper half of the range (roughly), moving into OB territory frequently (and at times persisting in the OB zone) and finding support around 35-50. When RSI finds support around 35-50, this may represent tradeable a price pullback—a retracement of the recent trend’s price move—that may work as a bullish entry if other technical evidence confirms.
During a downtrend, RSI will trend within the lower half of the range (roughly), moving into OS territory frequently (and at times persisting in the OS zone) and finding resistance around 50-65. When RSI finds resistance around 50-65 (sometimes higher given the violent nature of short-squeeze induced bear rallies), this may represent tradeable a price bounce—a retracement of the recent trend’s price move —that may work as a bearish entry if other technical evidence confirms.
RSI, like other indicators, cannot produce perfectly reliable and consistently accurate signals. Like other indicators, it can help identify higher probability trade setups when used correctly and when confirmed with other technical evidence. When considering trade setups in terms of probabilities rather than certainties, traders will find position sizing and risk management to be a vital part of any strategy that relies in part on the RSI.
📊 Smart Money Concepts: A Market Structure Showcase 📍What Is Smart Money?
Smart money is the capital that is being controlled by institutional investors, market mavens, central banks, funds, and other financial professionals. Smart money was originally a gambling term that referred to the wagers made by gamblers with a track record of success.
📍Principles of Smart Money Market Structure in Order Block Trading
Price moves within a structural of support and resistance. A breakout of the structural of support or resistance will lead to price movement in the next area of the support or resistance. When the price broke market structure was high the low point becomes a strong low. Strong Low is The Low that caused Manipulation and Break Structure (resistance).
Fresh high in an uptrend and fresh low in a downtrend. Weak Low/High is the Low that fails To Break Structure
🔹For every strong LOW, there is a weak High
🔹For every strong High, there is a weak Low
After a zone is tested many times or during a strong move, Supply and Demand levels eventually break. Due to the remaining orders being triggered and gradually removed, or an overwhelming number of orders in the opposite direction breaking the level.
👤 @AlgoBuddy
📅 Daily Ideas about market update, psychology & indicators
❤️ If you appreciate our work, please like, comment and follow ❤️
📊Market Structure Breakdowns Pt.1Not every pattern or indicator is a confirmation that you should enter a trade. Understanding the market structure is key and in these series we will explain how to read a Bullish and Bearish market structure formation with multiple indicators/strategies and what you should look for before entering a trade. The markets are either trending up or down until they experience a reversal in the opposite direction. Do not fight the trend, trade alongside with it's direction until a confirmation of reversal. It is not about being right, it is about trading on the correct side of the trend.
📈Bullish Market Structure
A bullish market structure is characterized by a series of higher highs and higher lows, indicating that buyers are in control and there is a strong demand in the market with a strong upward momentum. Connecting the swing lows and swing highs will be a clear indicator of bulls pushing the price higher on each level and flipping the previous resistance into a support zone. A good way to trade a chart pattern such as a falling wedge, is to wait for the price to reach around the zone of support. That will indicate the end of the pattern and will give the best possible entry. To have confirmation of this, make sure that you are looking at the volume. When the end of the the falling wedge approachses the previous resistance turned-into-support, you should see volume coming inside the market to push the price higher. One key thing you must understand is that when resistance lines are crossed, they become new support and the cycle repeats until the trend break.
📉Bearish Market Structure
A bearish market structure in the other hand, has a series of lower higher and lower lows, indicating that the sellers are in control and there is a strong downward momentum in the market. In this case, we will be looking for short opportunities. The same confirmation of a short is the selling pressure that can be characterized by negative delta volume. To confirm a trend line as true, it should have at least 3 touches where the price rejected from back into a support zone. The market structure is not symmetrical, with perfect patterns that completely respect each and every line you draw. Most patterns and indicators look asymmetrical and have a skewness and you should adapt to it. The big players are waiting for you to place your stop loss right above your trend line or pattern then push the price right above it so you close your position and they get their orders filled to push the prices lower. Stop hunting is one of the most important things you need to understand, until the market makes a Higher High of an important level, the market has not changed structure and it's still trending downwards.
👤 @AlgoBuddy
📅 Daily Ideas about market update, psychology & indicators
❤️ If you appreciate our work, please like, comment and follow ❤️
Navigating the Uncertainties of Fibonacci Retracements in CryptoHello, @TradingView community! I'm @Vestinda, and I'm thrilled to share an informative article with you today about Fibonacci Retracements.
While they can be useful tools for traders and investors in financial markets, it's important to note that they are not infallible and may not always produce the desired outcomes.
As discussed in our previous post, Fibonacci support and resistance levels are not infallible and may occasionally break. It is essential to remain vigilant and use these levels in conjunction with other technical indicators and market analysis to make informed trading decisions.
While Fibonacci retracements can be a useful tool in technical analysis, it is crucial to exercise caution and not solely rely on them as the sole basis for trading decisions.
Unfortunately, Fibonacci retracements are not infallible and may not always work as expected.
Let us examine a scenario where the Fibonacci retracement tool proves to be ineffective in technical analysis.
To make a prudent trading decision amidst the ongoing downtrend of the pair, you make a strategic choice to leverage the Fibonacci retracement tool. With meticulous attention to detail, you designate the swing low at 3,882 and the swing high at 10,482 for precise determination of a Fibonacci retracement entry point.
The BTC/USD Daily chart is shown below.
Upon careful analysis, it is evident that the pair has rebounded from the 50.0% Fibonacci retracement level for multiple candles. As an astute trader, you recognize this crucial pattern and conclude that it is a viable opportunity to enter a short position.
You thoughtfully consider, "This particular Fibonacci retracement level is showing remarkable resilience. It is undoubtedly a lucrative moment to short it."
You may have been tempted to take a short position in anticipation of profiting from the downtrend of the pair, while simultaneously daydreaming of cruising down Rodeo Drive in a Maserati.
However, if you had placed an order at that level without proper risk management, your hopes of profit would have quickly dissipated as your account balance plummeted.
Observing the price action of BTC, let's examine what occurred next.
Indeed, the price action of BTC demonstrates that the market is constantly evolving, and traders must be prepared to adapt to these changes.
As shown in this specific case, the price not only climbed close to the Swing High level, but the Swing Low marked the bottom of the previous downtrend. This serves as a prime example of the significance of flexibility in the dynamic realm of cryptocurrency trading.
What can we learn from this?
In the world of cryptocurrency trading, Fibonacci retracement levels can be a useful tool to increase your chances of success. However, it's important to understand that they are not foolproof and may not always work as intended. It's possible that the price may reach levels of 50.0% or 61.8% before reversing, or that the market may surge past all Fibonacci levels.
Additionally, the choice of Swing Low and Swing High to use can also be a source of confusion for traders, as everyone has their own biases, chart preferences, and timeframes.
In uncertain market conditions, there is no one correct course of action, and utilizing the Fibonacci retracement tool can sometimes feel like a guessing game. To improve your chances of success, it's crucial to develop your skills and use Fibonacci retracements in conjunction with other tools in your trading toolkit.
Thank you for taking the time to read our post.
We sincerely appreciate your attention and hope that you found it informative and helpful. If you did, we kindly request that you show your support by clicking the "Boost" button and subscribing to our page. Your support helps us create more valuable content for our community.
Why we should review price action to see if History will RepeatStudying price action and reviewing should be a key part to everyones trading and will improve overall results. Many Stocks, Currency pairs, Commodities or Indexes have differing nuances and characteristics with regards to Price Action so it is worth doing the homework before entering a trade. Even though they all trade around a similar Price Action Framework, quickly looking for small repeating patterns can greatly improve the probability and conviction and help your trades in the long run.
This short video looks EQR.asx which is a share listed on the ASX. By reviewing the previous price action, we can see that the current setup is so far following the same path as a previous big winner....I will be watching to see if history does repeat!!
Hope you enjoy
Gold winded in February while in March jumped Gold winded in February by strong US data while in March jumped by a Bank collapse
Gold shed 5.2% in February, as surprisingly strong US economic data propelled both yields and the US dollar higher
Global gold ETFs suffered more losses led by European funds while North American funds saw small outflows for the first time in two months. Recent futures positioning remains unavailable following issues with the data.
from the first of March GOLD jumped about 8.0% till now, and the reason is the collapse of the banking
2023 case for gold intact
Surprisingly strong US economic data has driven a rebound in the dollar and bond yields. Markets seem to be taking the data at face value with fears that more aggressive monetary policy is needed to tame inflationary pressures
Whilst this looks bad for risk assets and gold, which promptly reversed their respective four-month trends there are compelling arguments for why January data is no more than a blip and the prospect of an economic slowdown remains on the table
Though not without risks, a good case for gold remains in place for 2023 driven by: elevated geopolitical risk; a developed market economic slowdown; a peak in interest rates, and risks to equity valuations. In addition, continued central bank buying can’t be ruled out.
technically:
the price will do a retest till 1935 and then will push up again,
but any closing daily candle under 1931 then will support the price to get 1897
so stabilizing above 1977 will touch 2035
pivot price: 1958
resistance price: 1982 & 2035 &
support price: 1935 & 1897
[Tutorial] Price Action And How Can We Use It To Make MoneyWelcome to this video on Bitcoin and price action Part 1 of 3. But what exactly is price action, and how can it help you make informed trading decisions?
Price action is a technique used by traders to analyze market movements based on the price and
volume of a security, without relying on technical indicators or other external factors.
In this video, we'll explore some of the most commonly used price action patterns in Bitcoin trading
, including support and resistance levels, trend lines, candlestick patterns, price action patterns, and moving averages.
We'll also discuss how to use these patterns in combination with other forms of analysis to make informed trading decisions,
and how to manage risk when trading Bitcoin.
Bull and Bear Traps!!!👨🏫Hello, dear traders🙋🏻; I am Pejman, and welcome to TradingView Tunes📺. As a lover of classic cartoons, I would like to explain Bull and Bear Trap using the Road Runner and Coyote cartoons😍.
If you've never seen this cartoon👀, let me tell you, it's a masterpiece of trapping and pranking. But what does it have to do with financial markets🤷🏻❓
Believe it or not, there are some striking similarities between the traps Coyote🐺 sets for Road Runner🐦 and the traps that exist in financial markets💲. The market traps are known as bull🐮 and bear🐻 traps, and they can lead to significant losses if investors aren't careful.🙍🏻
For example, the Coyote paints🖌️ the road to drag the Road Runner to a suitable place and traps him with stones🪨 and TNT💣. Or he is trying to surprise the bird with TNT & cactus🌵, in another way.🤭
Large financial institutions and market makers, or whales🐋, try to deceive amateur traders in the financial markets. Like coyotes, they try to trap inexperienced people by creating fake buy🟢 and sell🔴 signals.
To trade with these traps, you should know technical analysis to neutralize the coyote traps of the market like Road Runner.😉
In the financial markets, we have two types of fraudsters. Bulls are the ones who buy and cause prices to rise☝🏻, and on the contrary, bears are the ones who sell and make prices fall👇🏻. Simple enough, right😊❓
However, I explained more about bulls and bears in the market types post👀. You can refer to this post to better understand the rest of the article.👇🏻😉
Every hunter needs prey. For example, we said that the Coyote used to paint the roads. Exactly bulls, by pumping up the price and bears by a sharp drop in the price, fool the inexperienced people. Also, all these events are short-term.
Like Road Runner, you have to pay close attention to the market⚠️.
In this post, I will teach you how to turn threats into opportunities and profit from them.✅
The first step is to identify these traps. Our first trip today is the bull trap.
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Bull Trap:
Let's start with the Bull Trap🏁.
This is when the market looks like it's on the up-and-up⬆️, so you start throwing money around like a looney tune💸. But just like Coyote's contraptions, the market can suddenly backfire and leave you feeling like you just got hit with an anvil💥.
It's enough to make you want to go "meep meep" all the way home☹️🏠. Be like Road Runner and stay alert, or you'll end up with a crate of dynamite💣 strapped to your back. That's a bull trap in a nutshell.
A bull trap is when the market appears to increase, so investors jump in, hoping to make a profit. But then, the market suddenly drops, and those investors are left holding the bag👜. They thought they were getting ahead of the game but were just falling into a trap.🪤
You may be fooled by the chart and expect the price to pump up, but in reality, the price will start to fall or act like a reversal pattern.↩️
At this time, those who traded without stop loss🚫 will lose the most. It would help if you watched out for these traps in any type, whether up, down, or sideways (range market).
The price must be below a resistance zone for a bull trap to form a reversal pattern. A bull trap can change an uptrend to a downtrend after creating classic reversal patterns such as double tops, heads & shoulders, diamonds, etc.😉
If you want to know the patterns and learn classic patterns with a quick review⏩, you can get help from the following post.
Now that you know this trap, we can talk about ways to recognize and deal with this trap.
How to recognize the Bull Trap🔎
Sir John Templeton says: The four most dangerous words in investing are: "This time it's different."🤔
We may have said these words and confused real traps with fake traps. But how can you prevent this mistake?🤷🏻
Do you remember that we talked about fake and valid breakouts in the Support and Resistance post?💭
You can also read the link below for a background on this topic.
Let's go back to our topic. To ensure that the breakout is valid, we should look for two confirmation signs✅️:
1. Increase in Trading Volume
2. Bullish candlestick patterns
Now let's go through each one in detail because the devil👹 is in the details 😂.
Increase in Trading Volume
For the breakout to be valid, the volume📶 of the broken candle must be significantly higher than the previous candles. But more is needed because coyotes are clever and intelligent. Even after the breakout, the trading volume for the other candles should remain high to ensure the failure is real.
In a bull trap, the volume of the fake breakout candles either does not increase or only slightly.
If you see that the trend has lost momentum after breaking out or has no strong momentum to continue or start the trend, this is precisely the trail of coyotes in the market.
Along with market volume, considering candlesticks and their patterns can be equally helpful as they clearly show market movement.
You can take a look at the following post to learn about these candlestick patterns and review them.
For example, by seeing bullish candlestick patterns, you can understand that a breakout is not fake.
Bullish Candlestick Patterns:
If the breakout candle is a giant momentum candle, it's called a Marubozu , which is not difficult to find on the chart. This candle has a green and long body, and its wick is tiny compared to its body, or it does not have a wick at all.
This candle is associated with a high trading volume, and it shows that TNT is not working in this upward trend, and real buyers are in the market.
Also, the pattern of the 👩🚀👩🚀👨🚀 Three White Soldiers 👩🚀👨🚀👩🚀 is a reversal pattern that can be seen as a continuation pattern in the charts.
Along with all these signs, you should always keep the market trend in mind.
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Bear Trap:
Next up is the Bear Trap.
This is when the market looks like it's going to crash💥 and burn🔥, so you start selling your assets like there's no tomorrow.
But just like Coyote's rockets, the market can suddenly bounce back and leave you feeling like you just got flattened by an Acme anvil.
Don't panic! Be like Road Runner and stay calm, or you'll fall off a cliff.
Bear traps are similar to bull traps. Young and inexperienced bears🐻 are caught in these traps.
When the young bears think the market is going down, these traps are activated, and the hunters place heavy buy orders.
At this moment, this heavy order will cause the price to turn upward, and anyone who has a short position without a stop loss will lose their money💸.
A trap is a trap, and it doesn't matter if it is a bear or a bull🐮. Here we use the duplicate confirmations we used in bull traps, like a steady increase in trading volume and continuation candlestick patterns.
When a support zone is broken, hunters prepare to set traps. If the bearish momentum candle is not accompanied by increased trading volume, this can be a sign of a trap.
The ⚫️⚫️⚫️ Three Black Crow ⚫️⚫️⚫️ candlestick pattern is usually a reversal pattern but sometimes acts as a continuation pattern. If a high trading volume accompanies this pattern, it can be a valid sign of a breakout.
Now I will tell you how to use these traps (Bull&Bear) and get profit from them like a professional trader.
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How to trade with a Bull Trap
The bull traps start with an uptrend. As you can see the picture has a resistance zone, and the price may test a zone several times before passing it.
When a fake breakout occurs, it may initially be accompanied by an increase in trading volume, but it is entirely temporary, and you will notice a decrease⤵️ in the intensity of the trend from the next candles.
When the intensity of the trend decreases, market coyotes activate their traps. And they set sell orders, and the bloody🩸 candles appear on the chart.
With a valid breakout of the last support, the price reaches our entry point station⛽️. You can place your stop loss a little higher than the top of the bull trap and place your stop loss🚫 above the breakout candlestick of the support zone, considering the higher Risk-Reward ratio.
To find the take profit💰 point, consider the difference between the peak trap and the support zone as X, and Viola, now expects X amount to profit from your entry point.
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How to trade with a Bear Trap
Now it's time for the second trap.
After occurring a valid support zone breakout and an increase in price, you must wait for the price to break through the last resistance zone after a sudden sharp move.
When you can use the signs⚠️, you are sure that the coyotes have abandoned the process, that there is no trap🪤, and that real failure has happened; you can open your long positions.
Now, this passed resistance zone has turned into support, and you can wait for the price to test this area several times for more confidence and then open your entry point.
Like trading in bull traps, in bear traps, you can place your stop loss a little below the valley of the bear trap.
Considering the higher Risk-Reward ratio, you can also put it below the breakout candle of the resistance zone.
The take-profit point is the same as the bull trap, but vice versa. Consider X from the lowest price in the bear trap and the resistance zone.
Now, as much as X, we can expect that the upward trend will continue and precious dollars will rain on our heads.
Now that you have learned about the bull trap🪤 in an uptrend and the bear trap in a downtrend↘️, you should remember that the market is not always up🔺️ and down🔻, and the road runner should also expect traps on the range roads. You should be aware of bull/bear traps in the range market.
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Range Market
When the price gets stuck between the support and resistance zones, the range market is created, and the coyotes also look for inexperienced road runners in this market.
This is a sad story for new traders who rush into positions when they see the resistance or support zone break.
Price fluctuations in range markets are minor; trading in a range market is much more complex than in bull and bear markets.
So I suggest you spend more time on your trading strategies and test them several times.
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Conclusion:
Even in life, some coyotes seek to trick you by creating fake situations. But you have to be careful and smart like Road Runner.
Sir John Templeton believes that: "Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria."
And also, David Dreman says: "Bear markets are like avalanches: they start slowly and accelerate gradually before gaining momentum and becoming a force of nature🏞."
In the financial markets, bulls and bears are constantly fighting each other, but the real winners are always those who use various tools and indicators to avoid risk and find safe spots for trading and profit.
Once you practice and familiarize your eyes with all kinds of trends and traps, you will become a road runner in the market.
So, if you want to be like the clever road runner and avoid falling into the bull and bear traps in the financial markets, stay alert, stay informed, and be prepared to adapt your investment💰 strategy when necessary.
In future posts, we will take new steps in technical analysis and travel to the world of classic patterns. So follow the future posts and share your opinions and ideas in the comments. Your comments🎓 are precious to me.
Also, if you have friends👬👭 who are into classic cartoons🎆 and trading, send them this post.
🔥WHY ALTCOINS FOLLOW THE BTC PRICE? A FULL GUIDE FOR TRADERS!🔥Hi, friends! I will explain why altcoins are following BTC and how traders can take advantage of this idea.
The first and main crypto is Bitcoin. I am sure that 99% of traders/investors discover crypto through BTC.
📊THE 4 MAIN REASONS WHY ALTCOINS FOLLOW BTC:
🔥 Bitcoin is the most influential cryptocurrency: As the first cryptocurrency and the largest by market capitalization, Bitcoin has a significant impact on the entire cryptocurrency market. The price of Bitcoin often affects the prices of other cryptocurrencies, and it can cause other altcoins to rise or fall in value.
Therefore, it's essential to keep a close eye on Bitcoin's price if you're trading altcoins, as it can indicate market trends and potential opportunities.
🔥 Altcoin prices are correlated with Bitcoin: Many altcoins have a strong correlation with Bitcoin's price movement. This means that if Bitcoin's price is rising, it's likely that the value of altcoins will also increase. However, if Bitcoin's price falls, altcoins are also likely to experience a decline in value.
As such, tracking Bitcoin's price can provide valuable insights into the behavior of other cryptocurrencies in the market .
🔥 Bitcoin can act as a safe haven asset: During times of market volatility or economic uncertainty, Bitcoin has historically acted as a safe haven asset. This means that investors tend to flock to Bitcoin as a way to store value and protect their investments.
As a result, Bitcoin's price can rise during times of crisis, and this can have an impact on altcoin prices as well. By monitoring Bitcoin's price, traders can gain insight into market sentiment and adjust their trading strategies accordingly.
🔥 Bitcoin is a market indicator: Bitcoin's price is often used as an indicator of the overall health of the cryptocurrency market. For instance, if Bitcoin's price is rising, it may indicate that the market is bullish and that investors are optimistic about the future of cryptocurrency.
On the other hand, if Bitcoin's price is falling, it may suggest that the market is bearish and that investors are taking a cautious approach.
By keeping an eye on Bitcoin's price, traders can gain a better understanding of market trends and make more informed decisions when trading altcoins.
✅HOW TRADERS CAN USE THIS BTC-ALTCOIN PATTERN
I made 4 simple comparisons for you to show it. I used Bitcoin (as #1 crypto) and ETH (#1 altcoin). Take a look on the chart and the numbers on it.
🚩 1st case. If BTC falls at the beginning of the bull market = altcoins fall so much.
In the first case BTC fell by -60-65% and ETH fell by -70-75%. It's not too much for ETH, but you can check the other alts. They fell by -85-90%.
🚩 2nd case. After the long consolidations altcoin grow higher than BTC.
BTC made +35%, but ETH made +81%. It's 2 times bigger than BTC.
🚩 3rd case. BTC and altcoins during the rally grow equally. Except for some skyrocketing crypto as AXS, SOL and etc, of course.
+452% for BTC and +480% for ETH.
🚩 4th case. New ATH is a time for altcoins' pumps. This is the time when they grow by 300-400% in a few weeks.
As you see, BTC made +5%, but ETH +157%!
🔥SUMMARY. So, the 2nd case (after the consolidation) and 4th case (at the new ATH) is the best to catch strong altcoins movements for a hundred percent% and 40-50 or even 100RR. Now you can use it in your trading, cause you will know what BTC do now and how it will affect altcoins.
I hope this idea was useful for you. Do you have your own notes? Write your most profitable BTC-atlcoins patterns in the comments!
💻Friends, press the "boost"🚀 button, write comments and share with your friends - it will be the best THANK YOU.
P.S. Personally, I open an entry if the price shows it according to my strategy.
Always do your analysis before making a trade.
Resistance level identification and application
Near the previous high, or when approaching it, or when reaching the psychological ceiling of the market or a position protected by bearish positions, the price may encounter resistance and pull back.
The depth of the pullback is determined by its strength. However, once it finds support after the pullback, there is a possibility of continued upward movement. If the resistance level is broken, the price may further increase or even experience a rapid surge.
Next update will cover the identification and application of continuation patterns in uptrends. Thank you for your attention!
FX:EURUSD FXOPEN:XAUUSD BINANCE:BTCUSDT FX:GBPUSD BITSTAMP:ETHUSD
The determination and application of support levelsWhen the price falls to or near the previous low point, or when it falls to the market's psychological bottom line or a position protected by the bulls, the price may stop falling and rebound after being supported at this position.
The strength of the rebound determines the height of the rebound. However, if the weak rebound is blocked by resistance, it is not ruled out that it may continue to fall. Once it falls below the support level, the price may further decline or drop rapidly.
The above explains the application of support levels. The application of resistance levels will be updated later.
BINANCE:BTCUSDT FXOPEN:XAUUSD FX:EURUSD COMEX:GC1! TVC:USOIL
📊 Smart Money Concepts | Supply & Demand🧐What is Smart Money?
Smart money refers to the capital that institutional investors, central banks, and other professionals or financial institutions control. It is managed by expert investors who can foresee market trends and make most of the profits. Smart money was originally a gambling term, where it refers to the gamblers that have extensive knowledge of the activity that they wager on or have insider information that the common public is not able to access. The smart money concept suggests that these investors can identify trends and opportunities before the broader market and position themselves accordingly. They may also be able to manipulate the market to their advantage by creating buying or selling pressure on certain securities. Some traders try to follow the smart money by analyzing the actions of these large investors through public filings, news reports, or other sources of information. However, it is important to note that not all trades made by institutional investors or large financial institutions are necessarily "smart," and blindly following their actions can be risky.
🔹 Supply Zone
In trading, a supply zone is a price range where there is an abundance of sell orders, resulting in increased selling pressure and potentially a temporary resistance level. A supply zone can be identified on a price chart as an area where the price has previously reversed or stalled, and where there are many unfilled sell orders or pending sell orders. Traders may use supply zones as a reference point for making trading decisions. For example, if the price approaches a supply zone, traders may consider selling or taking profits on existing positions. Conversely, if the price breaks through a supply zone, traders may see it as a bullish signal and consider buying or adding to long positions.
🔹 Demand Zone
In trading, a demand zone is a price range where there is an abundance of buy orders, resulting in increased buying pressure and potentially a temporary support level. A demand zone can be identified on a price chart as an area where the price has previously reversed or found support, and where there are many unfilled buy orders or pending buy orders. For example, if the price approaches a demand zone, traders may consider buying or adding to long positions. Conversely, if the price breaks through a demand zone, traders may see it as a bearish signal and consider selling or taking profits on existing positions.
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Learn How Support Becomes Resistance
Support and resistance levels are important points in time where the forces of supply and demand meet. These support and resistance levels are seen by technical analysts as crucial when determining market psychology and supply and demand.
Support is the level at which demand is strong enough to stop the asset from falling any further.
Resistance is the level at which supply is strong enough to stop the asset from moving higher.
The psychology behind support and resistance.
First let’s assume there are buyers who’ve been buying a stock close to a support area. Let’s say that support level is $50. They buy some stock at $50 and now it moves up and away from that level to $55. The buyers want to buy more stock at $50, but not $55. They decide if the price moves back down to $50, they will buy more. They’re creating demand at the $50 level.
Let’s take another group of investors. They were thinking about buying the stock at $50 but never did before. Now the stock is at $55 and they regret not buying it. If it gets to $50 again, they will not make the same mistake and they will buy the stock. This creates potential demand.
The third group bought the stock below $50; let’s say they bought it at $40. When the stock got to $50, they sold their stock, only to watch it go to $55. Now they want to buy it back at the same price they sold it, $50. They’ve changed their sentiment from sellers to buyers. This creates more demand.
A key concept of technical analysis is that when a resistance or support level is broken, its role is reversed. If the price falls below a support level, that level will become resistance. If the price rises above a resistance level, it will often become support. As the price moves past a level of support or resistance, it is thought that supply and demand has shifted, causing the breached level to reverse its role.
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