SOLUSD Weekly Outlook: Bullish Cypher Pattern

4 dni temu

Overview

On the weekly timeframe, SOLUSD has shifted gears since our last analysis. Previously, we flagged a bearish divergence—higher highs in price paired with lower highs on the DMI Delta—hinting at weakening momentum. Price has since declined, and now it’s tapping into a key demand zone, completing what appears to be a Bullish Cypher harmonic pattern.

Why This Matters

1. Bearish Divergence Played Out: The prior divergence signaled fading bullish pressure, and the subsequent drop brought SOLUSD from its highs into this demand zone—a textbook pullback scenario.
   
2. Bullish Cypher Completion: The pattern’s structure is taking shape: X-A (initial up move), A-B (~38.2%-61.8% retracement of X-A), B-C (~113%-141.4% extension of A-B), and now C-D targeting a 78.6% retracement of X-C. The D point aligns with this demand zone, marking a Potential Reversal Zone (PRZ).
   
3. Demand Zone Test: This level has historical buying interest. If it holds, it could validate the Cypher and spark a reversal.
   

Key Considerations

• Watch the PRZ: The 78.6% X-C retracement (~D point) is critical. To confirm a bounce, look for reversal signals like a bullish candle, volume surge, or RSI/DMI Delta divergence.
  
• Lingering Divergence Risk: While the drop aligned with the prior bearish signal, momentum remains a question. Cross-check with volume or DMI trends before committing.
  
• Risk Management: For longs, set stops below the demand zone. If shorting a breakdown, target the next support level from prior lows.
  
• Upside Potential: A confirmed Cypher could push the price toward the 38.2% or 61.8% retracement of the C-D leg—map these targets on your chart.
  

Conclusion

The recent decline in SOLUSD following our bearish divergence call has set the stage for a Bullish Cypher at this demand zone. If buyers defend this level with conviction, the pattern could drive a meaningful reversal, invalidating the prior bearish pressure. However, a failure to hold here might extend the correction. Traders should monitor price action and volume at the PRZ for the next actionable signal.

3 dni temu

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#### **[UPDATE]**

Since our last analysis, SOLUSD has exceeded the 0.786 retracement of the X-C leg and is now approaching the 0.886 retracement of the 0-X leg. This suggests the pattern may evolve into a Bullish Shark.

[Note]: The Bullish Shark pattern completes at the D point, which is typically located at the 0.886 - 1.13 retracement of the 0-X leg. To identify the D point accurately, ensure you've marked the significant low preceding the X point (often called '0') on your chart.

**[What This Means]**

• Pattern Evolution: The Bullish Shark completes at a deeper retracement (0.886 - 1.13 of 0-X), suggesting a potential for a more substantial reversal but with increased risk due to the extended move.
  
• New PRZ: The updated Potential Reversal Zone is around the 0.886 level of the 0-X leg. Look for confirmation signals like bullish candlesticks, volume surges, or momentum divergence (e.g., RSI or DMI Delta).
  
• Risk Management: With the PRZ at a lower price, adjust your stop-loss below the 1.13 level of 0-X to account for the pattern's tolerance.
  

**[Next Steps]**

• Calculate the PRZ: Determine the exact 0.886 level of the 0-X leg on your chart.
  
• Monitor for Reversal: Watch for bullish candlesticks, volume spikes, or positive momentum shifts at this level.
  
• Set Upside Targets: If the Shark pattern confirms, target the 38.2% or 61.8% retracement of the C-D leg.
  

**[Conclusion]**

The potential shift to a Bullish Shark offers a fresh opportunity for a reversal at a deeper level. While this setup could lead to a robust rally, it demands stricter risk controls. Stay vigilant for confirmation signals at the updated PRZ and adjust your trading plan to reflect this evolving analysis.