ETHUSD Quick post about incoming price drop

Here is a quick example of why I like using the Hull MACD in conjunction with the normal MACD. Here we see clear divergence with the Hull MACD and the normal MACD going in opposite directions. This lets us know that this uptrend is weak to begin with. The price action for the time frame shows this, with prices having a fairly strong ceiling. It seems we lanced through the ceiling and that has taken most of the strength out of the bulls for now.

No trading system is perfect but this is one pattern I have noticed for the short while I have been integrating the hull MACD into my system. Additionally, we see the Stocastic RSI is dropping swiftly and the RSI had a relative high a few hours ago. More likely than not (which is why this isn't financial advice) we will see convergence on the hourly normal MACD and another leg down.

Comment:

If you need some more assurity that the divergence really is predictive here is one recent example on the 1D timeframe. The red arrows point out the bearish divergence you would be seeing on the timeframe. Also note the Hull MACD has one final upswing before crashing back down. Think of the hidden divergence in the normal MACD and RSI and that finally Hull MACD cycle as the needle that pops the bubble.

Disclaimer, I had not noticed this pattern when this happened so I completely was unable to capitalize on it beyond learning an expensive lesson.

Here is the same concept on 2h for the most recent sell off. Once again the divergence is clear on the Hull MACD before it becomes visible on the normal MACD or RSI. Blue arrows again point out when the hidden divergence become visible on the RSI and the normal MACD.

Key takeaway from what I am getting at is simple. I currently see the hidden bearish divergence on the 1H chart. This dip therefor will generally not be as severe as if we saw it on the 2h or the 1D. Expect a divergent bounce to be visible on the 1h RSI and MACD. It will probably be clearer on the micro timeframes.

Working against the time frame generality is we have broken market structure with BTCUSD and the bottom looks to be lower than most people expect.

If we break the cloud it will be devastating for people without a longer view. In other words, if you see bearish divergence on the Hull MACD on the 1H, since we just had a massive drop the total sentiment might drive it down lower than one would generally accept and this hidden divergence on the 1H might lead to a higher percent loss than what we just saw on the 2H or even the 1D slide we saw earlier.

Double final last throught. This is crypto, and I am still developing this system. I don't currently have any way to predict the size of the needle pop price action. And in other circumstances it may that what I would think would be a needle pop would be an actual reversal (probably in a bull market). Once again, this is not financial advice because the system is not mature enough yet.

Comment:

I don't know about you guys, but I am starting to get a lot of faith in this systems ability to predict breakdowns. I am still shite at figuring out when things will hit resistance so I will continue to move my stops down as this develops. Should be another brutal 12-14 hours.

How marvelous.

Trade closed: stop reached:

I moved my stop on my trade to 450 this morning and it just got triggered so I was basically in short from 540 to here. We can see on the hourly chart some bearish divergence set in and so this will have to work itself out a bit but I expect we should see a clear downtrend within the next half day to three days.