AI16Z / USDTLong
Buy opportunity coming up!
ai16z had been going through a major price correction. The price retraced to $0.91 at Fib 0.786 level (the last line of defence for the bull) and finally presented a strong bounce towards the upside. All momentum indicators reached oversold territory and broke up the descending trendline. There are some signs of strength, however, it is still too premature to open a long position.
When the price goes down significantly and tries to recover to the upside, V shape recovery is quite rare. It usually goes through a very choppy consolidation phase and works its way through to the upside.
One way to identify the trend reversal for me is to use a Fibonacci retracement line. When I think the price has hit the bottom, I draw a Fib from the suspected top to the suspected bottom. In this case, from $2.30 to $0.91 (Orange colored fib line in the chart). Once I draw the line, I need to see if the price decisively break and closes above the Fib 0.236 level. When it does, there is a good probability the price continues to move up to at least 0.5. You can see in the chart that there is a sell block sitting just above Fib 0.5/previous week's level. But I need to look for more confluences as below:
1) I need to wait for the daily stochastics (9,3,3) to reset and start to move to the upside.
2) 4H MACD lines cross, point upwards and enter the bull zone (above 0).
3) 4H Stochastics is not overbought territory. If it is, the price is likely to retrace at least one more time.
If those three conditions are met and the price also breaks above 0.236 fib level, it is likely to give me a good entry for long.
The price has broken and closed above Fin 0236 level. 4H MACD has crossed but it is still not quite in the bull zone and also the 4H Stochastics has already reached the overbought territory and starting to roll over. I think there is a good chance the price will eventually move up, but the but it might have a minor pull back. Once the 4h Stochastics is reset and 4H MACD properly enters the bull zone, I will buy more.
When the price goes down significantly and tries to recover to the upside, V shape recovery is quite rare. It usually goes through a very choppy consolidation phase and works its way through to the upside.
One way to identify the trend reversal for me is to use a Fibonacci retracement line. When I think the price has hit the bottom, I draw a Fib from the suspected top to the suspected bottom. In this case, from $2.30 to $0.91 (Orange colored fib line in the chart). Once I draw the line, I need to see if the price decisively break and closes above the Fib 0.236 level. When it does, there is a good probability the price continues to move up to at least 0.5. You can see in the chart that there is a sell block sitting just above Fib 0.5/previous week's level. But I need to look for more confluences as below:
1) I need to wait for the daily stochastics (9,3,3) to reset and start to move to the upside.
2) 4H MACD lines cross, point upwards and enter the bull zone (above 0).
3) 4H Stochastics is not overbought territory. If it is, the price is likely to retrace at least one more time.
If those three conditions are met and the price also breaks above 0.236 fib level, it is likely to give me a good entry for long.
The price has broken and closed above Fin 0236 level. 4H MACD has crossed but it is still not quite in the bull zone and also the 4H Stochastics has already reached the overbought territory and starting to roll over. I think there is a good chance the price will eventually move up, but the but it might have a minor pull back. Once the 4h Stochastics is reset and 4H MACD properly enters the bull zone, I will buy more.
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