Okay, so I would like to teach you a bit about and how is this indicator connected to .
In this chart you can see three flags, each flag can be or .
But how do you know if a flag will be or bearish?
Pretty simple and pretty hard in same way.
If a price breaks uptrend ascending ressistance it means breakout!
And if the price breaks ascending it means a breakdown.
This type of trading is called breakout trading.
But what makes flag, a flag? In simple.
Flag is a continuation pattern, they usually represent only brief pauses in a dynamic stock also they are typically seen right after a big, quick move, thats why we see so much flags in the Bitcoin charts, its a very quick and dynamic moving stock compared to others stocks, not cryptocurrencies.
Channel/flag, is formed by a ascending and ascending ressistance level.
Inside this channel you can spot tests on both support and ressistance level.
So lets now just go trough the chart chronologically and see how the reacts to .
At first you can see the test of ressitance uptrend flag/channel.
This test was negative, you can spot that by histogram finding his top and starting to decline, same thing on "Point A".
As histogram is starting to decline, Bitcoin is about to test a certain level, this time it is a ascending , you can spot it at first uptrend test where the histogram turned around and started to see buying increasing, this same is valid for each succesful uptrend test. After some tests of each ascending ressistance or support, when the price leaves this channel, its a prediction for a sharp move in a way, which was broken, for example broken ascending ressistance level would mean breakout.
After the first flag has broken out, steep uptrend were build, and succesful test of this steeper uptrend meant another wave of buyers pushing price even higher, found ressistance at 6800, failed at testing second steep uptrend and found new channel.
In a second flag, Bitcoin is on selling wave, so for to give us buy signal, Bitcoin would need to break ascending ressistance and that would give buy signal, its opposite as buying wave, while on buying wave you see rise in histogram which meant succesful test, here means the fall (or rise from negative bottom if you will) of histogram, Bitcoin finding support.
After Bitcoin has failed in the second flag breaking/testing the ressitance twice as suggest and also the ascending ressistance which wasnt overhelmed, the flag has seen a breakdown.
After breakdown Bitcoin found support and formed another uptrend, found new ascending ressitance and formed another flag, on this last flag, you can beautifuly see how is testing, each test represent an ascending support test on the chart, after 4 succesful test in a row, the flag has broken out and saw a breakout!
MACD shows test of , ressistance, support.
When is MACD doing waves, or in another words blue riding on orange line, it means succesful test of uptrend, support and price of stock may continue to rise.
When Flag gets broken, heavy price action is ahead.
When uptrend is broken, usually downtrend is formed until stock finds support and from there form another uptrend.
The highest positive histogram tick represent finding ressistance, falling , headed to test support levels.
The lowest( or the longest if you will) negative histogram tick represent finding support and price headed to test ressistance for possible turnaround, on chart you can see two unsuccesful, which led to breakdown.
Hope you liked this Education about and connection and also some education about flags/channels.
Hope I havent missed anything important, if yes point it in comments.
If I have learned you anything that you are able to benefit from and be a bit better trader, let me know by smashing that agree button, each like is very appreciated as I am doing this for FREE and it took me a LOT of time, Thanks a Lot!
Fast lenght 12.
Slow lenght 26
Signal smoothing 9.