The concept in technical analysis of financial markets called 'Rally-Base-Rally' (Rise - Base - Rise), is a continuation pattern that indicates the likelihood of the price continuing to rise. The image connects price movement and trading volume to identify potential entry points.
Here is a detailed explanation of the components:
1️⃣. Price movement pattern (Rally-Base-Rally)
This pattern consists of three main phases:
•Phase One: Rally
◦It is a strong and sudden upward movement in price, driven by a significant increase in demand (strong buyers).
•Phase Two: Base
◦After the initial rise, the price enters a sideways or stabilization phase, where supply and demand temporarily balance. This area is called the "Demand Zone," as it represents the place where buyers paused to take a breather before continuing to rise.
•Phase Three: Rally Again
◦The price exits the base area with another strong upward movement, confirming that buyers have regained control and that the upward trend will continue.
2️⃣. Volume Analysis
Trading volume is an important indicator to confirm the strength of the movement. The image shows how to use volume to confirm this pattern:
•High Volume:
◦This volume appears during the first upward phase, confirming strong buying momentum.
•Low Volume:
◦This volume appears while forming the base area. A decrease in trading volume indicates that selling pressure is weak and that the stabilization phase is merely a period of calm and not a reversal of the trend.
•Volume Retest Peak:
◦When the price returns to test the base area (demand zone), the trading volume should be low. This confirms that selling interest is low at these levels, making it a relatively safe entry point.
3️⃣. Entry Point
The best entry point for a buy trade is when the price returns to the base area (demand zone) after it has formed, especially if this retracement is accompanied by low trading volume. This retracement provides an opportunity to buy at a good price before the next upward wave.
Summary:
The image explains a trading strategy based on looking for strong upward movements, followed by a stabilization period with low trading volume, then entering a buy trade when the price returns to test that stabilization area, expecting to continue the trend.
$BTC
Upward Ready.
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