Bearish divergence example on $ETH against $USDT
This is a clear example of a bearish divergence on Ethereum 
ETH against USDT pair. I took the 12-hour chart to exemplify the closest to reality what we could have done to spot an upcoming dip using the RSI oscillator vs price action to forecast a strong dip in price.
First of all watch the X marking a higher high around the 7th of January on the RSI and then a new higher high on the 19th of February, more than a month apart, describing a descending slope. The corresponding price action instead developed in an ascending channel. This is what we call a bearish divergence and it forecasts the strong 35% correction that started the 20th of February.
Being aware of situations like these allows you to exit a long strategy trade and maximize your profit.
On a side note, the 19th of February the information that was visible for us on the chart, besides the divergence, did not signal or suggest it would be happening the very next day. Kumo cloud was ascending, Kijun Sen (yellow line) was in an upslope, Chico Span was far and behind the price action and the blue conversion line moving above the Kijun Sen suggesting buy opportunity.
This is the relevance of close observation of the RSI oscillator and price action.
ETH against USDT pair. I took the 12-hour chart to exemplify the closest to reality what we could have done to spot an upcoming dip using the RSI oscillator vs price action to forecast a strong dip in price.First of all watch the X marking a higher high around the 7th of January on the RSI and then a new higher high on the 19th of February, more than a month apart, describing a descending slope. The corresponding price action instead developed in an ascending channel. This is what we call a bearish divergence and it forecasts the strong 35% correction that started the 20th of February.
Being aware of situations like these allows you to exit a long strategy trade and maximize your profit.
On a side note, the 19th of February the information that was visible for us on the chart, besides the divergence, did not signal or suggest it would be happening the very next day. Kumo cloud was ascending, Kijun Sen (yellow line) was in an upslope, Chico Span was far and behind the price action and the blue conversion line moving above the Kijun Sen suggesting buy opportunity.
This is the relevance of close observation of the RSI oscillator and price action.
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