Reversal target in sight?
Updated
The current bull run is still valid but based on a few technical indicators we may see some more price action to the downside before a continuation. There are several technical catalysts that may converge near or at the reversal target. Previous daily support, median line support, EMA convergence, and RSI hitting oversold (30).
Momentum – While price makes a higher high from Jan to Feb, a bearish divergence occurs as the RSI makes a lower high, indicating a change in momentum foreshadowing the current pullback. As the RSI falls we see it break through the first key support level, tries to correct, and gets rejected by the midline (50) to then continue the downtrend. As RSI breaks the second key level it tries to break back through to the upside and fails. Judging by the EOD price action on Friday we can assume price rejection was successful and will continue to the downside. RSI is approaching oversold which is a prime area for a reversal in momentum.
Trend – During the current bull run, we see the 12EMA converge on the 50EMA twice but never cross, indicating a strong uptrend. Despite the current price action, the uptrend remains intact as the 12EMA is converging on the 50EMA again but has not crossed. The 12EMA still has more room to the downside before finding support near the 50EMA. The current spread between the EMAs is approx. 2.3%, which is the distance from Friday's low to the lower median line.
Chart Pattern – Price is trading in an ascending channel and attempted to test the upper median line, but was rejected initiating the current downtrend. Price is approaching the lower median line where support was confirmed by Sept, Oct, and Nov lows. Price holding the lower median line and breaking back out of the demand zone may be confirmation of a reversal back towards Jan and Feb highs.
Support and Resistance – Price is approaching the upper part of the demand zone set by Dec highs and Jan Lows. If price can hold in or above the demand zone, that is a strong indicator bears are losing steam, and bulls may regain control soon.
What do you think about this target for a potential reversal?
Any comments or critiques would be appreciated!
This idea is for discussion purposes only and is not financial advice.
Momentum – While price makes a higher high from Jan to Feb, a bearish divergence occurs as the RSI makes a lower high, indicating a change in momentum foreshadowing the current pullback. As the RSI falls we see it break through the first key support level, tries to correct, and gets rejected by the midline (50) to then continue the downtrend. As RSI breaks the second key level it tries to break back through to the upside and fails. Judging by the EOD price action on Friday we can assume price rejection was successful and will continue to the downside. RSI is approaching oversold which is a prime area for a reversal in momentum.
Trend – During the current bull run, we see the 12EMA converge on the 50EMA twice but never cross, indicating a strong uptrend. Despite the current price action, the uptrend remains intact as the 12EMA is converging on the 50EMA again but has not crossed. The 12EMA still has more room to the downside before finding support near the 50EMA. The current spread between the EMAs is approx. 2.3%, which is the distance from Friday's low to the lower median line.
Chart Pattern – Price is trading in an ascending channel and attempted to test the upper median line, but was rejected initiating the current downtrend. Price is approaching the lower median line where support was confirmed by Sept, Oct, and Nov lows. Price holding the lower median line and breaking back out of the demand zone may be confirmation of a reversal back towards Jan and Feb highs.
Support and Resistance – Price is approaching the upper part of the demand zone set by Dec highs and Jan Lows. If price can hold in or above the demand zone, that is a strong indicator bears are losing steam, and bulls may regain control soon.
What do you think about this target for a potential reversal?
Any comments or critiques would be appreciated!
This idea is for discussion purposes only and is not financial advice.
Note
SP and RSI have reached the reversal target, the EMA lines have a little more to give compared to the two previous reversals. Watching for a bullish reversal candle on the daily chart tomorrow along with a follow-through day on Monday.Note
Today's red to green move makes a bullish hammer candle on the daily chart. Watching for RSI to show momentum to the upside, 12EMA to confirm uptrend next week. Another 1%+ gain with high volume on Monday will be a very bullish sign of a reversal.Note
Daily 12 and 50EMA cross to the downside invalidating previous bull run from March 2020, BUT also the 1HR EMAs cross to the upside invalidating the current short term downtrend from Feb 2021. Daily RSI (14 close) approaching resistance around mid-line (50). Watching for price to break next resistance around $13300 and RSI to hold above mid-line for confirmation of reversal.Note
Price broke and closed above $13300, RSI (10 close) also broke above the mid-line (50), and the Daily 12EMA is converging on the 50EMA possibly looking to cross next week initiating a new uptrend. Very strong indicators that a reversal in momentum has occurred and a new daily uptrend may start soon. Will watch for price to test the next supply zone around $13500 - $13700 and for RSI to hold above mid-line on next pullback.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.