How to add positions when the monthly CCI bottom diverges + weekly three consecutive Yang + daily line gap is not filled?

A monthly CCI bottom divergence, three weekly green candles, and an unfilled daily gap signal a high-probability bullish reversal setup for strategic entry.

Jul 24, 2025 at 05:22 am

Understanding the Monthly CCI Bottom Divergence

When analyzing the monthly CCI bottom divergence, traders are identifying a potential reversal signal in the long-term trend. The Commodity Channel Index (CCI) measures the current price level relative to an average over a specific period. A bottom divergence occurs when the price makes a lower low, but the CCI forms a higher low. This indicates weakening downward momentum despite the price decline. In the context of monthly charts, this signal carries significant weight due to the extended time frame.

To detect this divergence, open your trading platform and navigate to the monthly chart of the selected cryptocurrency, such as Bitcoin or Ethereum. Apply the CCI indicator with the default period of 14. Look for two distinct price lows where the second low is lower than the first. Then, check the corresponding CCI values at those points. If the CCI value at the second low is higher than at the first, a monthly CCI bottom divergence is confirmed. This is a foundational signal suggesting that large-scale selling pressure may be subsiding.

It is critical to wait for the divergence to fully form before acting. Premature entries based on incomplete patterns can lead to losses. Once confirmed, this divergence becomes one of the three conditions required for the entry strategy. It does not, on its own, justify a position addition. The next layers—weekly and daily patterns—must also align.

Identifying the Weekly Three Consecutive Yang Candles

The second condition involves the weekly chart showing three consecutive Yang candles. In Japanese candlestick terminology, a Yang (or white/green) candle indicates a bullish period where the closing price is higher than the opening price. Three such candles in a row on the weekly timeframe suggest sustained buying pressure and a shift in market sentiment.

To verify this pattern, switch to the weekly time frame of the same cryptocurrency. Ensure that each candle represents a full week of trading data. Check the last three completed weekly candles. Each must close higher than it opened, forming three consecutive green candles. The bodies of these candles should ideally be of meaningful size, not dojis or very small ranges, to confirm conviction.

It is acceptable if there are shadows (wicks), but the core requirement is the bullish close. If any of the three candles is red (bearish), the condition fails. This pattern reflects growing momentum and supports the reversal suggested by the monthly CCI divergence. When combined, these two signals increase the probability of a sustainable upward move.

Traders should note that the third weekly candle must be fully closed before proceeding. Acting on an incomplete candle introduces uncertainty, as the final close may invalidate the pattern. Patience is essential.

Analyzing the Daily Line Gap That Has Not Been Filled

The third component is the presence of a daily line gap that has not been filled. A gap occurs when there is a discontinuity between the previous day’s close and the current day’s open, often due to news, sentiment shifts, or high volatility. An unfilled gap acts as a magnet; markets often return to fill such gaps, but when they remain open, they can signal strong directional bias.

To locate such a gap, examine the daily chart. Look for a session where the opening price is significantly higher than the prior day’s close, creating a visible empty space on the chart. This is a bullish gap. Confirm that in the subsequent trading sessions, the price has not traded down into that gap zone. The gap remains “unfilled” as long as the low of any following candle does not reach or breach the upper boundary of the gap.

For this strategy, the ideal scenario is a bullish gap that appears after the monthly and weekly conditions are met. The persistence of the gap suggests strong demand and limited selling interest at lower levels. It reinforces the idea that upward momentum is intact and that pullbacks may be shallow.

Use horizontal lines on your charting tool to mark the gap boundaries. Monitor price action closely. If the gap fills, reassess the setup, as the strength of the move may be weakening.

Executing the Position Addition: Step-by-Step Process

Once all three conditions are satisfied, the stage is set for adding a position. This is not an initial entry but a strategic addition to an existing position or a new trade based on high-probability alignment.

• Open the monthly chart and confirm the CCI bottom divergence is complete and valid
• Switch to the weekly chart and verify three consecutive green candles have closed
• Examine the daily chart to ensure a bullish gap remains unfilled
• Wait for the next daily candle to open above the gap’s upper boundary
• Place a buy order at the current market price or use a limit order slightly above the opening price to ensure execution
• Set a stop-loss below the lowest point of the three weekly candles or below the gap, whichever is lower
• Allocate only a portion of available capital, adhering to risk management rules

Use a trading platform like TradingView or MetaTrader to set alerts for gap levels and CCI values. Automate condition checks where possible. Ensure your exchange supports the cryptocurrency and time frames required.

Risk Management and Trade Monitoring

Even with a confluence of signals, risk must be actively managed. The position size should not exceed a predetermined percentage of total portfolio value—commonly 1% to 3% per trade. This limits exposure if the market moves against the position.

• Monitor the daily chart for signs of the gap being filled
• Watch for bearish reversal patterns such as engulfing candles or shooting stars near resistance
• Track volume; increasing volume on up days supports continuation
• Reassess the weekly candles if a red candle closes, potentially signaling loss of momentum
• Adjust stop-loss upward as price progresses to lock in profits

Avoid emotional decision-making. Stick to the predefined rules. The strategy relies on technical confluence, not speculation.

Frequently Asked Questions

What if the daily gap fills after I enter the trade?

If the gap fills after entry, it may indicate weakening momentum. Consider reducing position size or tightening the stop-loss. The trade is not automatically invalidated, but caution is warranted.

Can this strategy be applied to altcoins?

Yes, provided the altcoin has sufficient liquidity and reliable historical data across monthly, weekly, and daily time frames. Low-volume coins may exhibit false signals due to manipulation or thin order books.

How do I confirm the CCI settings are correct?

Use the default CCI period of 14. Do not modify this unless backtesting confirms an alternative setting. Consistency in indicator settings ensures reliable signal comparison across assets.

What time of day should I check for these conditions?

Check after the UTC day/week/month close, typically at 00:00 UTC, to ensure all candles are finalized. Acting on incomplete data can lead to false setups.