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Key Tip: The most direct signal that a coin price is shifting from weakness to strength is the appearance of a bullish reversal candle. This move is simple and effective. Today, I continue to discuss the pattern of buying the dip with a hammer candlestick, which is also my first systematic sharing on this topic. Especially for traders who are used to looking at moving averages, be sure to remember this pattern.
1. This pattern usually appears near the bottom area of the coin price. The 10-day and 20-day moving averages show a clear bullish alignment, indicating that the coin price is in the early stages of an upward trend.
2. The coin price is stably trading above the 10-day moving average. This often indicates that large investors have begun to gradually accumulate positions. When the coin price experiences a short-term pullback, if a hammer candlestick forms at this time and the trading volume also decreases, it suggests that the current rebound and support strength are not strong.
3. The key point—if the next day the coin price shows a bullish reversal candle and no longer makes new lows, it is very likely a signal that the large investors' shakeout has ended.
4. It is important to note that the increase in the bullish reversal candle does not have to be large, but the coin price must close above the 10-day moving average. Only then can the validity of the signal be confirmed.