Bullish Divergence and Oversold on the 1 hr Timeframe
Updated
Disclaimer: Things move fast, by the time this is posted indicators my be saying different things, please base your trades on your own research and experience.
We have just reached a 10 day low and bounced off of horizontal support at ~30.8k and ascending support at ~31.4k. The most recent hourly candle closed above both support lines. The long term trend is pointing to a fall out of this large triangle we have been in, but in the short term I think we may have room for a quick long position.
This chart shows some bullish divergence appearing on the RSI on the 1 hr chart, as well as being in oversold territory on this chart and the 4 hour. We also got some nice volume on the first bounce off of the 30.8k level.
I am considering a long position up to the purple target area shown, with profit taking levels at the beginning, middle, and end of the zone. I will not enter into this trade until I see an hourly candle close above the divergence trend line, as well as the ascending support line, with a stop loss slightly below the 30.8k support level.
As you can see if a long position was taken the last time the hourly reached oversold and was held until the first sign of bearish divergence on the RSI, it would have been a nice 10% gain, or more if trading with leverage.
For now I am waiting to see what happens at this very key level before making any moves.
We have just reached a 10 day low and bounced off of horizontal support at ~30.8k and ascending support at ~31.4k. The most recent hourly candle closed above both support lines. The long term trend is pointing to a fall out of this large triangle we have been in, but in the short term I think we may have room for a quick long position.
This chart shows some bullish divergence appearing on the RSI on the 1 hr chart, as well as being in oversold territory on this chart and the 4 hour. We also got some nice volume on the first bounce off of the 30.8k level.
I am considering a long position up to the purple target area shown, with profit taking levels at the beginning, middle, and end of the zone. I will not enter into this trade until I see an hourly candle close above the divergence trend line, as well as the ascending support line, with a stop loss slightly below the 30.8k support level.
As you can see if a long position was taken the last time the hourly reached oversold and was held until the first sign of bearish divergence on the RSI, it would have been a nice 10% gain, or more if trading with leverage.
For now I am waiting to see what happens at this very key level before making any moves.
Note
We have bounced off the lower horizontal support once again and trending up into the ascending triangle as well. Also the 4 hr has bounced off the 30 RSI and still showing bullish divergence on the 1 hr and 4 hr on the recent highs.I'm still waiting to see either bullish divergence form on the lows of the the 1 hr RSI or a confirmed breakout from the upper trend line of the 1 hr RSI before entering into a long position.
We may have found our bottom here with a double bottom also showing on the 4 hr chart... time will tell but everything is still pointing to a reversal from this point. Good luck everybody!
Note
The recent 1 hr candle close gave us our first sign of bullish divergence on the lower trendline of the RSI.I have now began scaling into the trade with my first entry @ 31,235 and will add to my position either when an hourly candle closes above the upper RSI trendline or if we make another lower low on the price with a higher low on the RSI.
Stop losses have hurt me many times, wicking down to close me out of a trade for a loss before making the predicted move and missing potential gains. For now I am keeping a close eye on price action with no stop loss and will add one as we move into profits.
Good luck and trade at your own risk!
Note
With uncertainty in the markets at such a critical level and the daily RSI crossing under the 50 line I have decided to put up a stop loss at 31550 for a small 10% gain (using 10x leverage) that I expect to get triggered before a large reversal move occurs. I will re enter this trade with a 1 hr candle close above the current upper RSI trendline or a bullish 4 hr candle close, signaling a reversal at key support.Trade smart and be safe!
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I posted a new idea building upon this one where I will now be posting updates.
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