Catch The Bottom On Any Stock/Crypto! (Do This!)

Hello guys! This is a pure hardcore technical method of timing the bottom and it has worked numerous times in my discretionary trading journey helping me to catch bottoms and ride the full trend upwards to the moon. This is a journalling of my self studies and I am not encouraging anyone to take any financial action, please PM me if you'd like to know more financial stuff or make friends and we take it offline. Before I start, this is not financial advice and I’m not trying to sell you a trading course. By the end of the post if you find value in my content please do hit the like, share, save and follow as I’m trying to grow a small account without actively pushing to my circle of friends.

Timing The Low, Technical Difficulty Level: Intermediate.

I assume that you have your base knowledge on how to read candlestick patterns and know what's a high, low, open and close of a candle. Also, you know what's a trendline, and you generally know how to see a "zig-zaggy" pattern on a chart. With that, load up tradingview and add a few indicators 1) the Stochastics oscillator (not the stochastic RSI, just the pure stoch) and 2) the RSI and 3) add a Bollinger Bands Width Percentile by thecaretaker. Zoom out your charts to the Daily timeframe and we are good to start.

Step 1: Shape of Chart, and Time. In this example I'm using BRETT/USDT.P which is a cryptocurrency that in my opinion has found a strong bottom and we would use this for case study. Looking at the BRETT/USDT.P chart, we can see that 1) price did a strong push up that was parabolic and near vertical towards the left side and started to fade off during March of 2024 all the way till recently Sep 2024. The first step in identifying whether a chart is worth a second look is to eye-measure and time-measure the shape of the graph. If the downstrend after the upward push took roughly 3 to 4 times longer than the upward push resulting in a 75-80deg upward slope at the start and a 45deg downward slope toward the right then we are good. If the uptrend took 1 month, the downtrend theoretically should take 3-4months. If you see a 90deg vertical pump and a near 90deg dump resulting in more than 80% down in a short amount of time and fade off with very very small candles after that, please don’t trade it - it’s a dead chart.

Step 2: Identify Stochastics Reset on the Daily. In Technical Analysis, we often think of price in lockstep with volume and momentum. In my way of doing things I focus a lot on strength and weakness of momentum and how the chart generally looks. A reset in my view is a stochastic level crossing below the 20 read. The key here is to match stochastics with the BBWP (Bollinger Bands Width Percentile) to see if both of the indicators are trending downwards indicating a lack of momentum and volatility in the underlying asset. In the first picture you can see I drew a black vertical line to show the part where Stochs went way below 20 and BBWP is below 10 on 7 Sep 2024. This is your first indication that a bottom is likely forming.

Step 3: After identifying the weakness in stochastic and lack of volatility (BBWP), you now use the RSI to add a confluence to hunt for RSI divergences. A Bullish Divergence happens at the END of a downtrend and is denoted by price making a lower-low (LL) and RSI making a higher-low (HL). This signifies that strength of sellers are weakening and reaching exhaustion and this point it is relatively easy for buyers to come in and push price up (in theory). See my next picture with the 4 dark red circles. That is called a RSI Bullish Divergence.

Step 4: A lot of people don't know you can draw trendlines on momentum oscillators and it actually works better than drawing lines on the price chart. Next pic: Here you can see I drew a black downtrending line on the stochastics and highlighted the area where momentum actually broke the trendline to the upside using a red vertical! While the red vertical did not align perfectly with the bottom, it was a safer bet to confirm the previous low being the absolute bottom of this period. When momentum breaks out of a trendline governing the previous few months highs that is likely a strong indication of a shift in momentum direction!

Step 5: Actually by this point the aggressive buyers would have bought some already, or went LONG on their trades. But if you want to be super safe you can now look for a big strong "up candle" on the daily which breaks the downsloping trendline and wait for a retest of the downward sloping trendline again. Here's a quick tip: If breakout is real you shouldn't be hoping for an immediate retest of the breakout line because that would contradict your own trade ideas. If breakout = real, then I wait for immediate retest and buy = you are likely buying into weakness because if breakout = real then by logic the price should not retest "immediately" due to strength in the buy pressure. Makes sense? The "immediate retest" part is crucial in distinguishing whether you enter a valid breakout or a failed breakout. The trick here is to wait and check your momentum indicators for a reset below critical zones (like 20 read) and start to point up again while price consolidates above the breakout and not actually retest immediately and fully - in this case a trader should be looking to LONG HIGHER than wait for retest because momentum has already reset while price hovers at a higher level. OR wait for an actual rounded retest after some time, key here is AFTER SOME TIME has passed to confirm the strength in the breakout and the retest being a genuine pullback and not a dump-party. All these requires experience and patience. You may even want to spread out your entries in batches, batch 1 aggressively before breakout, batch 2 at the point of breakout confirmation after candle close, batch 3 if you are lucky enough to get a rounded retest after some time.

Summary: If all works out well and there is no major economic factor at play influencing price negatively, you should have sniped near the bottom successfully. Please note again this is for entertainment sharing purposes and I'm not responsible for any of your own financial decisions. Trading and investing carries risk of losing money and non of these are financial advice.

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