BTC Can Dump here? 4 Hour divergence have any value?
1. Market Analysis:
Asset: BTC (Bitcoin)
Timeframe: Multiple (4-hour, 1-hour, 15-minute, 30-minute)
Pattern: Bearish divergence on multiple timeframes
Additional Confirmation: Test of trendline resistance
2. Entry Criteria:
Bearish Divergence: Identify bearish divergence on the 4-hour, 1-hour, 15-minute, and 30-minute timeframes using indicators like RSI or MACD. Bearish divergence occurs when the price forms higher highs, but the indicator forms lower highs.
Trendline Resistance: Confirm that the price is testing a significant trendline resistance, which has been respected in the past.
3. Trade Setup:
Entry Point: Place a sell order near the trendline resistance once bearish divergence is confirmed and there is a rejection from the trendline. Enter the trade at the close of a bearish candle that forms near the trendline resistance.
Stop-Loss: Set the stop-loss order above the recent swing high or slightly above the trendline to limit potential losses if the price breaks through the resistance.
Take-Profit: Determine your take-profit target based on key support levels or a favorable risk-reward ratio. Consider using a risk-reward ratio of at least 1:2 to ensure that potential profits outweigh potential losses.
4. Risk Management:
Position Size: Calculate your position size based on your risk tolerance and the distance between your entry point and stop-loss level. Ensure that you only risk a predetermined percentage of your trading capital per trade (e.g., 1-2%).
Risk-Reward Ratio: Aim for a risk-reward ratio of at least 1:2 or higher. This means if your stop-loss is 500 points above your entry, your take-profit should be at least 1000 points below your entry.
5. Additional Confirmation:
Volume Analysis: Check for an increase in volume to confirm the validity of the bearish divergence and the potential for a strong downward move.
Support and Resistance: Ensure that the trade aligns with key support and resistance levels on higher timeframes (e.g., daily or weekly).
6. Trade Execution:
Place Orders: Set your sell order, stop-loss, and take-profit levels according to the above criteria.
Monitor the Trade: Keep an eye on the trade to manage it effectively. Adjust the stop-loss to break even or trail it as the trade progresses in your favor if necessary.
7. Review and Adjust:
Post-Trade Analysis: After the trade is closed, review the outcome to learn from the trade. Evaluate what worked well and what could be improved for future trades.
Asset: BTC (Bitcoin)
Timeframe: Multiple (4-hour, 1-hour, 15-minute, 30-minute)
Pattern: Bearish divergence on multiple timeframes
Additional Confirmation: Test of trendline resistance
2. Entry Criteria:
Bearish Divergence: Identify bearish divergence on the 4-hour, 1-hour, 15-minute, and 30-minute timeframes using indicators like RSI or MACD. Bearish divergence occurs when the price forms higher highs, but the indicator forms lower highs.
Trendline Resistance: Confirm that the price is testing a significant trendline resistance, which has been respected in the past.
3. Trade Setup:
Entry Point: Place a sell order near the trendline resistance once bearish divergence is confirmed and there is a rejection from the trendline. Enter the trade at the close of a bearish candle that forms near the trendline resistance.
Stop-Loss: Set the stop-loss order above the recent swing high or slightly above the trendline to limit potential losses if the price breaks through the resistance.
Take-Profit: Determine your take-profit target based on key support levels or a favorable risk-reward ratio. Consider using a risk-reward ratio of at least 1:2 to ensure that potential profits outweigh potential losses.
4. Risk Management:
Position Size: Calculate your position size based on your risk tolerance and the distance between your entry point and stop-loss level. Ensure that you only risk a predetermined percentage of your trading capital per trade (e.g., 1-2%).
Risk-Reward Ratio: Aim for a risk-reward ratio of at least 1:2 or higher. This means if your stop-loss is 500 points above your entry, your take-profit should be at least 1000 points below your entry.
5. Additional Confirmation:
Volume Analysis: Check for an increase in volume to confirm the validity of the bearish divergence and the potential for a strong downward move.
Support and Resistance: Ensure that the trade aligns with key support and resistance levels on higher timeframes (e.g., daily or weekly).
6. Trade Execution:
Place Orders: Set your sell order, stop-loss, and take-profit levels according to the above criteria.
Monitor the Trade: Keep an eye on the trade to manage it effectively. Adjust the stop-loss to break even or trail it as the trade progresses in your favor if necessary.
7. Review and Adjust:
Post-Trade Analysis: After the trade is closed, review the outcome to learn from the trade. Evaluate what worked well and what could be improved for future trades.
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.