This example is a good one explaining how we can predict trend reversals. This setup will be in the future in any markets and any timeframes. You should know how to use it properly because it will help you to take the right decision.
So, let's start!
The price made an attempt to break 8000.00 . We got a candle after that confirming that buyers did not have the power to push the market higher. The market had formed a new swing high and the price moved back below the . We got a divergence between the price, and histogram. It became the 1st signal telling us about the trend reversal.
After that, the price continued the sideways movement and gave us a new swing high. This new swing high allowed us to change the divergence into the double divergence which made the trend reversal signal stronger.
At the same time, we got two swing highs at the same level, which allowed us to talk about a pattern - a trend reversal chart pattern. When the price had broken the signal level of the , this pattern was confirmed as a reversal one. histogram and lines had confirmed the further downward movement and we saw the falling to lower support zones.
We got a strong candle with the long tail reaching 6000.00 , but with close price at 7000.00 . The price moved sideways one more time and made an attempt to move above SMA50 in order to confirm the bouncing from 7000.00 level and continuation of the uptrend. Now we can see that SMA50 acts as a resistance line and it does not allow the market to move upward. It can be a signal that if the price breaks 7000.00 support, we will be able to see the falling to SMA100 and the most exciting at SMA200 which also includes the uptrend line and 6000.00 level. This zone will be very interesting for possible buying based on confirmed reversal signals from the 4H and 1H timeframes.
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