Ethereum | Hammer, Doji + Bearish Divergence Fully Confirmed

23 thg 2

We will look at the RSI divergence but first, let's focus on some candlestick reading.

The hammer candlestick pattern can work to signal an upcoming reversal.

The main requirement for a hammer pattern to be valid, after the type of candle itself, is that it must show up either at the top or bottom of a trend. What this means is that a hammer mid-way through a move has no value and thus confirmation is needed for this chart signal.

After this highly convoluted introduction (or at least that's how it felt to me), here is the daily chart:

➖ 21-Feb. we have a perfect hammer candlestick pattern at a potential top of a trend/move. For this to be a top, confirmation is needed though.

➖ 22-Feb. we have a Doji, which means indecision. So, prices are rising and first the "top signal," the hammer. Then a Doji signaling indecision. Indecision based on the up-move. The market is saying, "will it continue or not."

➖ 23-Feb. the session starts red, which is the confirmation. If the session ends red today it would confirm both the Doji and hammer as bearish signals. If the session has high volume and breaks below EMA10, it turns into a very strong bearish signal and the top is likely in.

RSI Divergence

This is what initially caught my attention when I looked at the chart, a classic.

ETHUSDT producing higher highs, obviously; Its daily RSI lower highs:

Namaste.