#CryptoCharts101 How do you identify trends, reversals, or breakouts?
Identifying Trends:
• Price Structure is King:
Uptrend: The price creates peaks (Highs) that are higher and valleys (Lows) that are higher (Higher Highs & Higher Lows).
Downtrend: The price creates peaks (Highs) that are lower and valleys (Lows) that are lower (Lower Highs & Lower Lows).
• My Visual Shortcut (Confirmation): Moving Averages (EMA 50 and 200).
If the price is above them and they are sloping upwards, the trend is bullish.
If the price is below and they are sloping downwards, it is bearish.
Identifying Reversals (Trend Change):
• Exhaustion Signals (Divergences): This is my main early alert.
• Bearish Divergence: The price marks a higher High, but a momentum indicator (such as the RSI) marks a lower High. This tells me that the strength of the upward movement is fading.
Identifying Breakouts:
• The Key Action: I look for a large body candle that closes decisively above a key resistance or below a key support. I don't trust "wicks" that only briefly breach the level.