Price was in a downtrend but the swing lows have been flatlining recently, indicating seller exhaustion, which formed a Falling Wedge, which can often result in a bullish reversal. Let’s look at an example: Bitcoin Cash (BCH) One goes down, the other goes up! It shows that sellers are easing up. It adds weight to the evidence.īullish RSI Divergence occurs when Price makes a lower low but RSI makes a higher low. Now, by itself, RSI Divergence is not signal to follow, usually, but when it occurs in conjuction with a breakout, it can validate it, strengthening the conviction. It happens occasionally and when it does, it’s a good time to pay attention. RSI Divergence happens when price and RSI indicator move in opposite direction. The latter probably needs some explaining. Typically, breakouts that occur with increased volume have greater level of conviction. To confirm a breakout from Falling Wedge, traders can look for:ġ) Increased volume (buyers stepping up big) Still no guarantee that it won’t be a breakout failure, but tilts the odds in your favor. Today we’ll show you how to confirm such breakouts, meaning, what other indicators can increase our confidence level. Yesterday, we saw several bullish breakouts from Falling Wedge and Down Channel patterns (see blog). Using Bullish RSI Divergence to Confirm a Breakout
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