Four-Step Framework for Identifying Bottoms
1. Find a High Time Frame Support Zone
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ļø Requires technical analysis skills.
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ļø Support zones can be horizontal supply and demand levels, EMAs, or trend lines.
šKey levels are often the easiest to identify.
2. Obtain Technical Confirmation
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ļøLook for indicators such as bullish divergence with RSI or liquidation spikes.
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ļøBreakouts above EMAs can also serve as confirmation, though they may come later.
3. Ensure Sufficient Volume
šHigh volume is crucial for confirming a bottom.
š Volume should increase as the price moves up, indicating strong buying interest.
4. Have a Reason for the Bottom
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ļøPreferably, there should be a bullish narrative or news catalyst.
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ļø While not necessary, having a reason can strengthen the case for a bottom.
šPractical Application Using Pepe Chart
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ļøAnalyzed the Pepe chart to illustrate the framework.
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ļøIdentified high time frame support levels and noted low volume during initial attempts to confirm a bottom.
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ļøHighlighted a successful identification of a bottom with:
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ļø A bullish divergence.
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ļø A liquidation spike followed by a reclaim of the support level.
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ļø A breakout above the EMAs with sustained high volume.
Conclusion
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ļø The framework can be applied to various cryptocurrencies, not just meme coins.
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ļøTest the framework with different coins.
#bottom