Bearish Divergence on the CADCHF 4h Chart
Updated
Bearish Divergence with CCI (Commodity Channel Index)
A bearish divergence occurs when the price is making higher highs (indicating bullish sentiment), but the CCI, which measures the variation of a security's price from its statistical mean, is making lower highs. This discrepancy can signal weakening momentum in the upward price movement, suggesting a potential reversal or pullback.
In this case, this divergence on the 4h chart indicates that despite the price climbing, the momentum behind this rise is fading, hinting at a possible downturn.
MACD (Moving Average Convergence Divergence) Crossing Down
The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price. A downward cross, where the MACD line crosses below the signal line, is a bearish signal. It suggests that the short-term momentum is slowing down compared to the long-term momentum, reinforcing the bearish sentiment indicated by the
bearish divergence in the CCI.
Price Touching the Upper Bollinger Band
This suggests the market might be in an overbought condition, especially in the context of the bearish divergence with the CCI and the MACD crossing down. When the price hits the upper band, it's common for traders to expect a retracement or reversal, as the market could be seen as stretched too far to the upside.
Price Ranging Above an Untouched Weekly Pivot Point
Pivot points are used to identify potential support and resistance levels. The fact that the price is ranging above the weekly pivot point and hasn't touched it yet indicates that this level could act as a target for the downward movement. Pivot points are often considered floors or ceilings in market price movements, with the price making significant moves upon reaching these points.
Potential Drop to the Weekly Pivot Point at 0.66417
Considering the bearish signals from both the CCI divergence and the MACD crossover, along with the price's current position above an untouched pivot point, the analysis suggests that there's potential for a downward move towards the weekly pivot point at 0.66417. This level could serve as a short-term objective for bears in the market or a reversal point for traders to watch closely.
Summary
This analysis points to a cautious stance for traders, with a bearish outlook in the short term based on the technical indicators that were highlighted. It would be wise to monitor these indicators closely, along with other market factors, to confirm any potential moves before making trading decisions.
Always remember, while technical analysis can provide insights into market movements, it's crucial to consider a wide range of factors, including market news and economic indicators, before trading.
A bearish divergence occurs when the price is making higher highs (indicating bullish sentiment), but the CCI, which measures the variation of a security's price from its statistical mean, is making lower highs. This discrepancy can signal weakening momentum in the upward price movement, suggesting a potential reversal or pullback.
In this case, this divergence on the 4h chart indicates that despite the price climbing, the momentum behind this rise is fading, hinting at a possible downturn.
MACD (Moving Average Convergence Divergence) Crossing Down
The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price. A downward cross, where the MACD line crosses below the signal line, is a bearish signal. It suggests that the short-term momentum is slowing down compared to the long-term momentum, reinforcing the bearish sentiment indicated by the
bearish divergence in the CCI.
Price Touching the Upper Bollinger Band
This suggests the market might be in an overbought condition, especially in the context of the bearish divergence with the CCI and the MACD crossing down. When the price hits the upper band, it's common for traders to expect a retracement or reversal, as the market could be seen as stretched too far to the upside.
Price Ranging Above an Untouched Weekly Pivot Point
Pivot points are used to identify potential support and resistance levels. The fact that the price is ranging above the weekly pivot point and hasn't touched it yet indicates that this level could act as a target for the downward movement. Pivot points are often considered floors or ceilings in market price movements, with the price making significant moves upon reaching these points.
Potential Drop to the Weekly Pivot Point at 0.66417
Considering the bearish signals from both the CCI divergence and the MACD crossover, along with the price's current position above an untouched pivot point, the analysis suggests that there's potential for a downward move towards the weekly pivot point at 0.66417. This level could serve as a short-term objective for bears in the market or a reversal point for traders to watch closely.
Summary
This analysis points to a cautious stance for traders, with a bearish outlook in the short term based on the technical indicators that were highlighted. It would be wise to monitor these indicators closely, along with other market factors, to confirm any potential moves before making trading decisions.
Always remember, while technical analysis can provide insights into market movements, it's crucial to consider a wide range of factors, including market news and economic indicators, before trading.
Note
What an impressive move into the desired direction. After some green candles, price dropped almost to the target level at the pivot point. To play it safe - it might be ok to close the trade now … but I‘m still pretty sure, that price will touch the pivot.Note
OMG :-) another big move towards the pivot! This time even a little closer, but we're not there yetTrade closed: target reached
what a ride .. seconds after writing the last comment: touchdown! Target reached, the weekly pivot was touched :-)
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