In this idea we will see how the tricking crossover between 19 MA and 100 MA can help us to see the Market changes its behavior, with subsequent trend reversal (to the Upward in our case). Firstly I should remind that current trend is a Downtrend, which has been confirmed by a bearish crossover between 20 and 121 MAs on a daily chart or by 19 MA and a Price Chart on weekly, plus the bunch confirmations from the indicators such as RSI and MFI, which changed its behavior, which conforms to the Downtrend. And the Price behavior itself serves as one more confirmation - as an example the one reacts on resistances more efficient than on support, which is typical for a downtrend. Please read my previous analyzes for more details.
Before we start I would like to explain on some basics of the crossovers between moving averages, which help us to confirm main trends. First - we need to choose two lines faster and longer on an appropriate timeframe to confirm main trends. These lines have to reflect the market behavior in a correct way. That's why standard 50 and 200 MAs are not always suitable. For example on a daily timeframe I use 20 MA to reflect the market behavior in a short-term and 121 MA to reflect the market behavior in a mid-term. On a weekly timeframe I use 19 MA to reflect the market behavior in a mid-term and 100 MA to reflect the market behavior in a long-term. These lines also work in conjunction with indicators such as RSI and MFI, which change their behavior depended on trend, on both timeframes. To understand if you have chosen the right MAs watch for how they reflect the trend changes and price behavior, how they interact with the price chart, and how they interact with indicators (RSI, MFI as an example). It is important to choose moving averages individually for each single asset, because the each asset has its own pace of moving, which is unique, and different from the others. Plus always double check your lines because the pace of price moving can change.
One more important thing to know about crossovers: Crossover itself do not define a new trend, the one only confirm it. In other words the trend has already changed and if you correctly chose moving averages you will get the confirmation in time and will be able to change your trading strategy according to a trend. Or wait for better conditions, before to invest in an asset if you are a hodler (in case the market took a downtrend).
There is also an important detail, which works not only for Moving Averages, but for the whole Technical Analysis. The asset has to be fundamentally strong and highly liquid. If the asset has no these criterions, the whole TA for it is just a waste of time.
So when you know the necessary basics on the crossovers between moving averages let's go to the analysis itself. Here we will use the TRICKING crossovers between 19MA and 100MA to catch the reversal.
So why they are tricking? As you see on the Chart the death cross between these MAs signaled the start of an Uptrend and the golden cross between these MAs signaled the start of a Downtrend.
Why this happens? As you know from the basics the crossovers only confirm the trend, but not define the one. In some way we just get a too slow confirmation of a downtrend in case with the Death Cross, and a too slow confirmation of an Uptrend in case with the Golden Cross. This way the losses are already booked and the previous downtrend is already exhausted, when we get the Death Cross. Conversely with the Golden Cross the gains are already booked and the previous uptrend is already exhausted. But the most important to understand that these tricking crossovers do not necessarily mean that the current trend will reverse, and we can not use them as the opposite signal and turn them into usual crossovers. They only signal that current trend is exhausting, so when this cross occur look for a market changes its behavior and prepare yourself for a reverse. Pay attention to the chart to see how these crosses work. When the Death cross happened the price had already bottomed, but the trend has not reversed right after death cross, we saw an accumulation period which confirmed that market has changed its behavior, and only after an accumulation the price took a new trend. Something similar happened with a Golden Cross - when the Golden cross occurred the price had already formed its new high, but trend has not reversed yet, we saw a corrective triangle which signaled the market changed the behavior and only after the Breakout of a triangle the price took its new trend.
You can see that historically these crossovers served as a good indications of market behavior changes. Which might serve as a good clue that will help to catch the reversal in time, especially if you use it in conjunction with indicators, because they change their behavior depended on a trend, which is a good confirmation that trend exhausting and the market preparing a start platform for a new trend. Remember not to use these crossovers as an indicator for a trend reversal, but use them as an indication of a trend exhaustion.
Potential bottom:
In one of my previous idea I wrote that zone $6.200-6.700 is the best zone for a bottom. This zone still stay the best option for a new bottom, because it is a strong support on itself, and high volume node. But I would make a small notice on this zone. As you see historically this zone is the most tested by sellers, which points out on there is a lot of pressure on this zone. It might hold the price from decline several times, but there is a good possibility for this zone to be broken, because of a lot of pressure. This fact made me to consider zones that are lower $6.200-6.700 zone. These zones serves as a good options for a potential bottom too.
- $5.000-5.300 zone has no a high volume node as others two, but served as a good support for the price before the rally to $13.800 continued.
- $4.350-4.600 zone has a high volume node and an accumulation base under it. Also two fib retracement levels of 91% as an extra.
Conclusion: if we use the incoming death cross (which is not so near yet) and the info about the potential bottom. We might define the one when it happens, because previously these tricking crosses were good at defining the bottom and the pick for the price (to be correct: were good at confirming the bottom and the pick). Plus some signs of an accumulation would be the most important confirmation for the new bottom.
And of course the correct defining a bottom will be an important step in catching the Reversal in time!
Screenshots in addition:
Tricking Crossovers between 19 and 100 Weekly MAs - better view
Possible Bottoms (High Probability) - better view
$6.200-6.600 Support zone performance
Small notice:
Guys you should understand that this Chart was made to explain a conception and is a tough projection of a possible price behavior. The real behavior will be far more different. That is why you should use this chart as a rough blueprint rather than an exact roadmap.
Thank You for reading this idea! Hope it is been useful to you and some of you will turn this information into profitable information:)
Please hit the Like button if you like this idea. Also share your own thoughts and analyzes in comments below.
Remember this analysis is not 100% accurate. No single analysis is. To make a decision follow your own thoughts.
The information given is not a Financial Advise.
Before we start I would like to explain on some basics of the crossovers between moving averages, which help us to confirm main trends. First - we need to choose two lines faster and longer on an appropriate timeframe to confirm main trends. These lines have to reflect the market behavior in a correct way. That's why standard 50 and 200 MAs are not always suitable. For example on a daily timeframe I use 20 MA to reflect the market behavior in a short-term and 121 MA to reflect the market behavior in a mid-term. On a weekly timeframe I use 19 MA to reflect the market behavior in a mid-term and 100 MA to reflect the market behavior in a long-term. These lines also work in conjunction with indicators such as RSI and MFI, which change their behavior depended on trend, on both timeframes. To understand if you have chosen the right MAs watch for how they reflect the trend changes and price behavior, how they interact with the price chart, and how they interact with indicators (RSI, MFI as an example). It is important to choose moving averages individually for each single asset, because the each asset has its own pace of moving, which is unique, and different from the others. Plus always double check your lines because the pace of price moving can change.
One more important thing to know about crossovers: Crossover itself do not define a new trend, the one only confirm it. In other words the trend has already changed and if you correctly chose moving averages you will get the confirmation in time and will be able to change your trading strategy according to a trend. Or wait for better conditions, before to invest in an asset if you are a hodler (in case the market took a downtrend).
There is also an important detail, which works not only for Moving Averages, but for the whole Technical Analysis. The asset has to be fundamentally strong and highly liquid. If the asset has no these criterions, the whole TA for it is just a waste of time.
So when you know the necessary basics on the crossovers between moving averages let's go to the analysis itself. Here we will use the TRICKING crossovers between 19MA and 100MA to catch the reversal.
So why they are tricking? As you see on the Chart the death cross between these MAs signaled the start of an Uptrend and the golden cross between these MAs signaled the start of a Downtrend.
Why this happens? As you know from the basics the crossovers only confirm the trend, but not define the one. In some way we just get a too slow confirmation of a downtrend in case with the Death Cross, and a too slow confirmation of an Uptrend in case with the Golden Cross. This way the losses are already booked and the previous downtrend is already exhausted, when we get the Death Cross. Conversely with the Golden Cross the gains are already booked and the previous uptrend is already exhausted. But the most important to understand that these tricking crossovers do not necessarily mean that the current trend will reverse, and we can not use them as the opposite signal and turn them into usual crossovers. They only signal that current trend is exhausting, so when this cross occur look for a market changes its behavior and prepare yourself for a reverse. Pay attention to the chart to see how these crosses work. When the Death cross happened the price had already bottomed, but the trend has not reversed right after death cross, we saw an accumulation period which confirmed that market has changed its behavior, and only after an accumulation the price took a new trend. Something similar happened with a Golden Cross - when the Golden cross occurred the price had already formed its new high, but trend has not reversed yet, we saw a corrective triangle which signaled the market changed the behavior and only after the Breakout of a triangle the price took its new trend.
You can see that historically these crossovers served as a good indications of market behavior changes. Which might serve as a good clue that will help to catch the reversal in time, especially if you use it in conjunction with indicators, because they change their behavior depended on a trend, which is a good confirmation that trend exhausting and the market preparing a start platform for a new trend. Remember not to use these crossovers as an indicator for a trend reversal, but use them as an indication of a trend exhaustion.
Potential bottom:
In one of my previous idea I wrote that zone $6.200-6.700 is the best zone for a bottom. This zone still stay the best option for a new bottom, because it is a strong support on itself, and high volume node. But I would make a small notice on this zone. As you see historically this zone is the most tested by sellers, which points out on there is a lot of pressure on this zone. It might hold the price from decline several times, but there is a good possibility for this zone to be broken, because of a lot of pressure. This fact made me to consider zones that are lower $6.200-6.700 zone. These zones serves as a good options for a potential bottom too.
- $5.000-5.300 zone has no a high volume node as others two, but served as a good support for the price before the rally to $13.800 continued.
- $4.350-4.600 zone has a high volume node and an accumulation base under it. Also two fib retracement levels of 91% as an extra.
Conclusion: if we use the incoming death cross (which is not so near yet) and the info about the potential bottom. We might define the one when it happens, because previously these tricking crosses were good at defining the bottom and the pick for the price (to be correct: were good at confirming the bottom and the pick). Plus some signs of an accumulation would be the most important confirmation for the new bottom.
And of course the correct defining a bottom will be an important step in catching the Reversal in time!
Screenshots in addition:
Tricking Crossovers between 19 and 100 Weekly MAs - better view
Possible Bottoms (High Probability) - better view
$6.200-6.600 Support zone performance
Small notice:
Guys you should understand that this Chart was made to explain a conception and is a tough projection of a possible price behavior. The real behavior will be far more different. That is why you should use this chart as a rough blueprint rather than an exact roadmap.
Thank You for reading this idea! Hope it is been useful to you and some of you will turn this information into profitable information:)
Please hit the Like button if you like this idea. Also share your own thoughts and analyzes in comments below.
Remember this analysis is not 100% accurate. No single analysis is. To make a decision follow your own thoughts.
The information given is not a Financial Advise.
