Macd and RSI % Change Signals Devis'So

vor 2 Stunden

20% Change Creates Very Strong Candles and Leads to Trend Reversals
What does a 20% change refer to? In this context, the "20% change" likely refers to the price movement over a specific period of time, such as a daily or weekly candle. If the price moves up or down by 20% during this time, it results in a large, strong candle. These strong candles signify major shifts in market sentiment.

How does it lead to trend reversals? Large price movements of 20% often indicate that the current trend is exhausted. For example:

After a long uptrend, if a 20% price drop occurs, it might suggest that buyers are losing control, and a bearish reversal could be imminent.
Similarly, after a downtrend, a 20% price rise can signal that sellers are exhausted, leading to a bullish reversal.
These candles create extreme market reactions, prompting traders to shift their positions based on the expectation that the momentum is about to change.

2. 10% Candles and Liquidation Strategy
What are 10% candles? These refer to candles where the price has moved by approximately 10% during a trading session. A 10% price move creates a noticeable shift in market conditions but may not be as drastic as the 20% candles. However, they still represent significant momentum in the market.

How can you trade in a way that liquidates these candles? To "liquidate" these candles means targeting strategies where the price retraces or moves in the opposite direction after the 10% candle forms. This could involve:

Fade the Move: After a 10% candle, traders might anticipate a correction or pullback as the market digests the large move. For example, after a 10% bullish candle, a trader could take a short position, expecting a correction.
Stop-Loss Hunting: Traders may also aim to trigger stop-losses around key levels formed by the 10% candles. For instance, after a big 10% up candle, if many traders have entered long positions, a retracement that liquidates those long positions could result in cascading stop losses, accelerating the downward move.
3. MACD Strengths of 2%, 3%, 4%, and 5%
What does MACD percentage change indicate? In the MACD indicator, the percentage strengths (2%, 3%, 4%, and 5%) refer to how much the MACD values are diverging from their signal line. When the MACD increases by these percentages, it indicates increasing momentum in the market:

2% MACD Strength: A small shift in momentum, indicating a slight divergence between the short-term and long-term moving averages. Traders might look for early signs of a trend shift.
3% MACD Strength: This signals stronger divergence, where the short-term price movements are pulling away from the long-term trend.
4% and 5% MACD Strength: These larger divergences indicate significant momentum and potential trend shifts. When MACD values increase or decrease by 4% or 5%, it often suggests a more powerful trend or reversal is developing.
How does this relate to strong candles and trend reversals? As MACD percentages grow larger, the trend becomes more defined. For example:

A 5% MACD strength following a large price candle (like a 20% move) signals that the trend is becoming overextended. This often suggests that a reversal is imminent.
Conversely, smaller MACD strengths like 2% or 3% can indicate a gradual momentum build-up, giving traders an early signal to enter trades before the larger moves happen.
4. Strong Candles Indicating Trend Reversals
How do strong candles indicate reversals? Strong candles, like those with 10% or 20% price moves, often form at extreme points of market sentiment. If a strong bullish candle appears after a prolonged downtrend, it might indicate that buyers are stepping in, and a reversal could occur.

Conversely, if a strong bearish candle forms after a long uptrend, it can signal that sellers are starting to dominate, leading to a trend reversal. Traders often watch for these strong candles at key support or resistance levels, as they can be indicative of reversals.

5. Adding 2 Pullback Levels
What are pullback levels? Pullback levels refer to points where the price retraces temporarily before continuing in the direction of the overall trend. In trading strategies, adding pullback levels helps traders anticipate where the price may pause or reverse slightly before resuming its trend.

Why add two pullback levels? Adding two pullback levels can help refine entries and exits:

First pullback level: This is typically a minor retracement level, such as 38.2% or 50% of the strong candle’s move. It provides an early opportunity for traders to enter a trade in the direction of the main trend after a brief pullback.
Second pullback level: This is a deeper retracement, such as 61.8% or 78.6%. If the price reaches this level, it may indicate a stronger reversal or deeper correction before resuming the primary trend.
By using these levels, traders can better time their trades after a strong candle has formed, minimizing risk and improving their entry points.

Summary
A 20% price change creates extremely strong candles, often signaling a trend reversal as it shows exhaustion of the current trend.
10% candles are significant, and trading strategies can focus on liquidating these moves by anticipating corrections or pullbacks.
MACD strengths of 2%, 3%, 4%, and 5% indicate increasing momentum. The higher the percentage, the stronger the momentum and likelihood of a trend continuation or reversal.
Strong candles generally signal the start of a trend reversal, especially when paired with high MACD divergences.
Adding two pullback levels after strong candles helps traders anticipate retracement points for better trade entries and trend continuation strategies.