Four-Step Framework for Identifying Bottoms
1. Find a High Time Frame Support Zone
✅️ Requires technical analysis skills.
✅️ Support zones can be horizontal supply and demand levels, EMAs, or trend lines.
🗝Key levels are often the easiest to identify.
2. Obtain Technical Confirmation
✅️Look for indicators such as bullish divergence with RSI or liquidation spikes.
✅️Breakouts above EMAs can also serve as confirmation, though they may come later.
3. Ensure Sufficient Volume
📈High volume is crucial for confirming a bottom.
📝 Volume should increase as the price moves up, indicating strong buying interest.
4. Have a Reason for the Bottom
✅️Preferably, there should be a bullish narrative or news catalyst.
✅️ While not necessary, having a reason can strengthen the case for a bottom.
📊Practical Application Using Pepe Chart
✅️Analyzed the Pepe chart to illustrate the framework.
✅️Identified high time frame support levels and noted low volume during initial attempts to confirm a bottom.
✅️Highlighted a successful identification of a bottom with:
✅️ A bullish divergence.
✅️ A liquidation spike followed by a reclaim of the support level.
✅️ A breakout above the EMAs with sustained high volume.
Conclusion
✅️ The framework can be applied to various cryptocurrencies, not just meme coins.
✅️Test the framework with different coins.
