Finding the bottom in crypto generally and for ETH specifically
Here we have the last bubble pop of ETH going into the present bubble pop. I can have a general habit of over managing my trades (and I am sure I am not a lone) so I am creating a big picture to help me know when to exit my (so far) highly profitable short. And I am hoping to use one of the simplest of tools, MACD and price action divergence. I decided to strip away the RSI convergence as well because when I start looking at the charts I perseverate over the RSI being too low on the 1-2h timeframes and I forget to have some confidence in the larger time frames.
We see classic divergence on this 2h chart. The first and second bubbles first leg (in purple) are clearly sloping down while the MACD has a flatter orientation. We start to reach the absolute bottom (in orange) when we see the clearly higher low on the MACD but a lower low on the price action. If you iterate this chart but change the time frame you will see that the divergence is more severe in the lower time frames but not as much on the higher time frames. As the divergence becomes visible on the higher time frames the degree we will on the higher time frames the more the opposite reaction will be. In other words, you will see a greater rally if the divergence is clearly visible on a daily chart than on a 4h chart.
The lines for the second drop are just to illustrate a broad point about divergence and are not there to predict the time of any bounce nor price targets. Every pop will abounce will be different. What I an looking for to make sure we are clearly out of the sideways action is within the circle. You can see the MACD is "caught in the air" in that it turns up without first passing into zero territory. Depending on your risk appetite (and I have a lot) you would look at getting in with the MACD caught in the air for a lower timeframe or, for those that are risk averse and want to be more of a continuation pattern trader you would get in if you see that behavior on a higher time frame (maybe not caught in the air, but bouncing off zero).
And finally, I hard lesson I learned: you can be right on the TA but take an over leveraged position. You can see the descent down for the first bubble pop is rather toothy. If you are looking for an entry make sure you use the RSI or some other indicator to make sure you are not about to go on a ride that gets you liquidated. Cause all this is not really financial advice, it is just me thinking out loud.
We see classic divergence on this 2h chart. The first and second bubbles first leg (in purple) are clearly sloping down while the MACD has a flatter orientation. We start to reach the absolute bottom (in orange) when we see the clearly higher low on the MACD but a lower low on the price action. If you iterate this chart but change the time frame you will see that the divergence is more severe in the lower time frames but not as much on the higher time frames. As the divergence becomes visible on the higher time frames the degree we will on the higher time frames the more the opposite reaction will be. In other words, you will see a greater rally if the divergence is clearly visible on a daily chart than on a 4h chart.
The lines for the second drop are just to illustrate a broad point about divergence and are not there to predict the time of any bounce nor price targets. Every pop will abounce will be different. What I an looking for to make sure we are clearly out of the sideways action is within the circle. You can see the MACD is "caught in the air" in that it turns up without first passing into zero territory. Depending on your risk appetite (and I have a lot) you would look at getting in with the MACD caught in the air for a lower timeframe or, for those that are risk averse and want to be more of a continuation pattern trader you would get in if you see that behavior on a higher time frame (maybe not caught in the air, but bouncing off zero).
And finally, I hard lesson I learned: you can be right on the TA but take an over leveraged position. You can see the descent down for the first bubble pop is rather toothy. If you are looking for an entry make sure you use the RSI or some other indicator to make sure you are not about to go on a ride that gets you liquidated. Cause all this is not really financial advice, it is just me thinking out loud.
Trade active:
This chart looks extra-ordinarily optimistic. I set an to be taken in at 555 and so I am active. I moved in before the MACD was caught in the air on the 2h chart but with the H-MACD upswinging and the divergence apparent (see my other posts) I am confident that this will pay off for me.
And I promise every Floridian that you will all be rich... because we're gonna print some more money! Why didn't anybody ever think of this before?
~Nathan Explosion
~Nathan Explosion