Have you ever bought Bitcoin because it "seemed cheap" after a drop, only to see the price fall even further? This happens when we look only at the chart and ignore what's happening behind the scenes.
Today, I'm going to teach you a simple strategy to filter false entries by combining Technical Analysis with On-Chain Analysis.
1. The Common Mistake: Relying solely on the RSI
Many traders see the RSI (Relative Strength Index) below 30 and think: "It's oversold, time to buy!".
Beware: In strong downtrends, the RSI can remain "oversold" for weeks while the price melts down. The RSI indicates that the price dropped quickly, but it doesn't guarantee that it has stopped.
2. The Confirmation: The Flow of Exchanges (Exchange Net Flow)
To have conviction, you need to know what the "Whales" (large investors) are doing. This is where the On-Chain data comes in.
The Golden Strategy:
Look for CONFLUENCE (when two signals say the same thing):
* ✅ Signal 1 (Chart): RSI below 30 on 4H or Daily (The asset is "discounted").
* ✅ Signal 2 (On-Chain): Net Flow of Exchanges NEGATIVE (Outflow).
Why does this work?
If the price is falling (red chart), but you see large amounts of BTC leaving exchanges to cold wallets (Outflow), it means that Smart Money is accumulating and removing supply from the market.
* Less Supply + Low Price = Imminent Price Explosion. 🚀
The Opposite Scenario (The Trap ⚠️):
If the RSI is low, but the Exchange Flow is POSITIVE (lots of BTC entering the exchange), DO NOT BUY. The whales are sending coins to dump on the market. Support will break.
💡 Master Tip:
Don't try to guess the exact bottom. Wait for On-Chain to confirm that the bleeding has stopped before placing your order.
💬 And you? Do you use On-Chain data or only trade by looking at candles? Comment below what your biggest difficulty is today! 👇 Follow for more tips!
