How to arrange the monthly line breaking through the downward pressure line + the weekly moving average golden cross + the daily line stepping back on the 10-day line?

A monthly breakout above downtrend resistance, confirmed by a weekly golden cross and daily 10-day SMA support, signals a high-probability bullish reversal in crypto markets.

Jul 26, 2025 at 08:29 am

Understanding the Monthly Line Breaking Through the Downward Pressure Line

When analyzing long-term cryptocurrency price trends, the monthly chart plays a crucial role in identifying structural shifts. A downward pressure line is typically drawn by connecting two or more significant high points on the price chart, forming a descending resistance line. When the monthly closing price breaks above this line, it signals a potential reversal from a bearish to a bullish trend. This breakout must be confirmed by a strong monthly close above the resistance level, ideally accompanied by increased trading volume.

To identify this setup, traders should first plot the monthly candlestick chart of the cryptocurrency in question. Use a charting platform such as TradingView or MetaTrader. Draw the downward pressure line by selecting the "trendline" tool and connecting at least two major swing highs. Wait for a full monthly candle to close above this line. The confirmation of the breakout is stronger if the candle closes well above the line, not just a wick piercing it. This indicates sustained buying pressure over the entire month.

Recognizing the Weekly Moving Average Golden Cross

The golden cross on the weekly chart is a powerful bullish signal formed when the 50-week moving average crosses above the 200-week moving average. This crossover suggests that medium-term momentum is shifting upward after a prolonged downtrend. To spot this, ensure your chart is set to the weekly timeframe and add both moving averages. The 50-week MA represents the average price over the past year, while the 200-week MA reflects the average over roughly four years.

Wait for the 50-week MA to move above the 200-week MA and remain above it for at least one full week. A crossover that occurs while the price is also above both moving averages adds further strength to the signal. It's essential to verify that the crossover isn't a false signal by checking volume and price action. A rising volume during the crossover supports the validity of the golden cross. Some platforms allow alerts for such crossovers—set one to avoid missing the event.

Confirming the Daily Price Action on the 10-Day Moving Average

After confirming the monthly breakout and the weekly golden cross, the next step is to analyze the daily chart for tactical entry opportunities. The 10-day simple moving average (SMA) acts as dynamic support during uptrends. A healthy bullish structure often shows price pulling back to test the 10-day SMA before resuming upward movement. This "stepping back" behavior indicates strength, as buyers step in at the moving average level.

To apply this, switch to the daily candlestick chart and plot the 10-day SMA. Look for instances where the price dips toward the 10-day line but does not close significantly below it. A daily candle closing near or above the 10-day SMA after a minor pullback confirms support holding. Avoid entries if the price closes far below the 10-day line, as this may indicate weakening momentum. Use additional tools like RSI or MACD on the daily chart to confirm that oversold conditions are not present, which could suggest a deeper correction.

Integrating All Three Conditions for a High-Probability Setup

The confluence of the monthly breakout, weekly golden cross, and daily retest of the 10-day SMA creates a high-probability bullish scenario. This multi-timeframe alignment filters out noise and increases confidence in the trade. Start by ensuring all three conditions are met in sequence. First, verify the monthly close above the downward pressure line. Then, confirm the 50-week MA has crossed above the 200-week MA on the weekly chart. Finally, observe the daily price action respecting the 10-day SMA as support.

When all three align, consider initiating a position. Use a limit order slightly above the daily 10-day SMA to enter on a bullish candle confirmation. For example, if the 10-day SMA is at $30,000 and price bounces from $30,100 with a strong green candle, place a buy order at $30,200. This avoids chasing the price while ensuring participation in the move. Always check for news or macroeconomic factors that could disrupt the trend, such as regulatory announcements or major exchange outages.

Setting Stop-Loss and Position Management Rules

Risk management is critical even in high-probability setups. After entering a trade based on this strategy, place a stop-loss below the recent swing low on the daily chart or below the 10-day SMA if the pullback was shallow. For instance, if the price bounced from $30,100, set the stop-loss at $29,500 to allow for normal volatility. Avoid placing the stop too tight, as it may be triggered by short-term noise.

Position sizing should reflect the confidence level of the signal. Since this is a multi-timeframe confirmed setup, a larger allocation may be justified, but never risk more than 2% of your total capital on a single trade. Consider using a trailing stop once the price moves favorably, locking in profits as the trend progresses. Monitor the weekly chart to ensure the golden cross remains intact—any reversal of the 50-week MA below the 200-week MA would invalidate the long-term signal.

Common Pitfalls and How to Avoid Them

One major mistake is acting on partial signals. Do not buy based solely on the monthly breakout without confirming the golden cross. Similarly, a daily retest of the 10-day SMA in isolation can lead to false entries. Always wait for full confirmation across all three timeframes. Another error is ignoring volume—low volume during the monthly breakout reduces its reliability. Use on-chain data or exchange volume indicators to validate participation.

False breakouts occur when price briefly moves above the downward pressure line but quickly reverses. To avoid this, require the monthly candle to close above the line, not just intramonthly highs. Also, ensure the weekly golden cross is not occurring during a sideways market, where moving averages may cross without a real trend. Lastly, avoid overtrading—this setup may appear only once every few years for a given asset, so patience is essential.

Frequently Asked Questions

What if the weekly golden cross happens before the monthly breakout?

It’s acceptable for the golden cross to precede the monthly breakout. In fact, it may indicate that momentum is building. However, do not enter until the monthly close confirms the breakout above the downward pressure line. The daily 10-day SMA retest should still be used as the final entry trigger.

Can this strategy be applied to altcoins?

Yes, but with caution. Major cryptocurrencies like Bitcoin and Ethereum have more reliable moving average signals due to higher liquidity. For altcoins, ensure sufficient trading volume and historical data exist before applying this method. Less liquid assets may produce false crossovers or erratic price action.

How do I draw the downward pressure line accurately?

Use at least two clear swing highs on the monthly chart. The line should touch the tops without cutting through candle bodies. If price repeatedly rejects at this line over months or years, it’s a valid resistance. Adjust the line if new highs form, but only after the breakout is confirmed.

Should I use simple or exponential moving averages?

Stick with simple moving averages (SMA) for consistency across timeframes. The 50 and 200-period SMAs are standard for golden cross analysis. Exponential moving averages (EMA) react faster but may generate premature signals in volatile crypto markets.