Looking at the ETH/USDC 4-hour chart, here's a breakdown based on key trading rules, with some emojis for fun!
Trading Rule 1: Identify the Trend 📈
The price action clearly shows a recent strong uptrend 🚀. The moving averages (MA) are all angled up, with the shorter-term MAs (the yellow MA(7) and purple MA(25)) well above the longer-term MA (the pink MA(99)). This alignment confirms a bullish sentiment 🐂 and strong upward momentum.
Trading Rule 2: Use Moving Averages as Dynamic Support 🛡️
Notice how the price has been bouncing off the MA(7) and MA(25) lines during this rally. This indicates that these lines are acting as dynamic support levels. Traders could have looked to enter a long position (buy) on a pullback to one of these lines, especially if a bullish candle pattern formed on the support. For instance, the candle around 4,550.38 USDC found support right on the MA(25) before continuing its move up 🟢.
Trading Rule 3: Look for Price Rejection and Resistance 🛑
The chart shows the price hitting a peak around 4,768.27 USDC before experiencing a significant rejection. The long wick on that candle (the "pin bar") shows that sellers stepped in at that level, pushing the price back down 📉. This area around the recent high is now a strong resistance zone 🧱.
Trading Rule 4: Wait for Confirmation of Breakouts or Reversals 🔄
After the rejection at the resistance, the price has started to pull back. It's now testing the MA(7) line. A break and a close below this line could signal that the short-term momentum is slowing down. A more significant reversal could be confirmed if the price breaks below the MA(25) as well. The current price action is in a consolidation phase ⚖️, so it's wise to wait for a clear signal before making a move.
