ETH/USD - Strong RSI Buy Signal and possible Fibonacci Bounce

COINBASE:ETHUSD   Ethereum / Dollar
ETH/USD has significantly dropped below MA(50) approaching a support line that has already proven sufficient for two previous dips. A bounce from the support line coincides with the Fibonacci 0.618 level that is broadly accepted as a key retracement level. The previous dips provided a strong buy signal before continuing the bull trend: The oversold cyclic smoothed RSI .

The cyclic smoothed RSI of the current dip is also highly oversold and we can expect a reversal at this point.

As we are notably low on Volume , we have a low overall participation especially on the buyer side. Thus, it is highly recommended to wait for a surge of Buy Volume and the next candles to close clearly above the dip for sufficient confirmation of the reversal before entering a long position.


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Respectfully, you are not reading the RSI correctly. The RSI is much more complicated than simply being an overbought/oversold indicator although that is primarily how it is taught. Over a 2 day period from Jan. 14 - January 16, the RSI formed a 'failure swing' in classic form between the 40 and 60 level. An RSI failure swing puts in an RSI support level. In this case, the support level was approximately 40. When that support level is broken it is a signal to short. You have that area circled (the most recent circle) and have labeled that area as being a buy signal, it is not. Notice that this RSI support area at 40 was violated before the price broke down below the ascending trend line. In this case, the RSI gave an excellent early short signal. This happens very often but most traders don't see it happening because they don't truly understand how to analyze the RSI. In a trending market, you will get lucky a lot buy simply buying when RSI goes 'oversold' but in order to not get burned you have to be cognizant of the RSI on multiple time frames and look at how your smaller time frame fits into the bigger picture. If the bigger picture RSI is bearish, the smaller time frame RSI 'oversold' level is probably telling you to sell not buy.
What do you think of the bearish divergance and the bearish head and shoulders pattern?
your analysis amazing
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