USDJPY | Hidden Bearish Divergence | 1H
Currently, the USDJPY chart shows the formation of a hidden bearish divergence and a double top pattern, both indicating that the uptrend is shifting into a downtrend. Additionally, new lower lows (LL) and lower highs (LH) are forming, confirming the change in market structure. These factors suggest the presence of a potential reversal zone (PRZ), where the price is likely to continue its downward movement.
Explanation:
1: Hidden Bearish Divergence:
The price is formed higher highs (HH), while the RSI is showing lower highs, signaling weakness in the uptrend and a potential reversal.
2: Double Top Formation:
A double top is a strong reversal pattern, indicating that the price has struggled to break through a resistance level and is now likely to move downward.
3: Market Structure Shift:
The formation of lower lows (LL) and lower highs (LH) indicates a transition from an uptrend to a downtrend, confirming bearish sentiment.
4: Potential Reversal Zone (PRZ):
The confluence of divergence, the double top, and the structural change points to a PRZ where sellers are likely to dominate, pushing the price further down.
This setup suggests a bearish bias, and traders could look for sell opportunities after proper confirmation, such as a retest of the PRZ or a bearish candlestick pattern.
Explanation:
1: Hidden Bearish Divergence:
The price is formed higher highs (HH), while the RSI is showing lower highs, signaling weakness in the uptrend and a potential reversal.
2: Double Top Formation:
A double top is a strong reversal pattern, indicating that the price has struggled to break through a resistance level and is now likely to move downward.
3: Market Structure Shift:
The formation of lower lows (LL) and lower highs (LH) indicates a transition from an uptrend to a downtrend, confirming bearish sentiment.
4: Potential Reversal Zone (PRZ):
The confluence of divergence, the double top, and the structural change points to a PRZ where sellers are likely to dominate, pushing the price further down.
This setup suggests a bearish bias, and traders could look for sell opportunities after proper confirmation, such as a retest of the PRZ or a bearish candlestick pattern.
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