How to follow up the monthly line breaking through the downward trend line + weekly MACD golden cross + daily line daily limit?

A monthly breakout above a downtrend line, confirmed by a weekly MACD golden cross and a high-volume daily surge, signals strong bullish momentum across timeframes.

Jul 28, 2025 at 12:01 am

Understanding the Monthly Line Breaking Through the Downward Trend Line

When analyzing long-term market trends in cryptocurrency, the monthly chart provides a macro perspective on price movements. A downward trend line is drawn by connecting two or more significant high points on the price chart, indicating sustained bearish pressure. When the monthly closing price breaks above this trend line, it signals a potential reversal in the long-term trend. This breakout must be confirmed with a strong close above the line, ideally accompanied by increased trading volume. Traders should validate the breakout by checking whether the price sustains above the trend line for at least one full month. A false breakout, where the price quickly re-enters the downtrend, can mislead investors. Therefore, confirmation is critical. The breakout of the monthly downward trend line suggests that long-term selling pressure may be weakening and that institutional or large-scale accumulation could be underway.

Interpreting the Weekly MACD Golden Cross

The Moving Average Convergence Divergence (MACD) is a momentum indicator that helps identify trend changes. On the weekly chart, the MACD consists of two lines: the MACD line (short-term EMA minus long-term EMA) and the signal line (a 9-period EMA of the MACD line). A golden cross occurs when the MACD line crosses above the signal line, indicating increasing bullish momentum. This crossover is more significant on the weekly timeframe due to its longer duration, reducing noise from short-term volatility. To ensure reliability, traders should check if the MACD histogram turns positive and begins to expand, confirming the strength of the bullish signal. Additionally, the golden cross should ideally occur from below the zero line, suggesting a shift from bearish to bullish territory. It's essential to cross-verify this signal with price action—such as higher highs and higher lows forming on the weekly chart—to avoid false signals in choppy markets.

Analyzing the Daily Line Reaching Daily Limit

In cryptocurrency trading, the term "daily limit" typically refers to the maximum price increase allowed within a 24-hour period, although most major crypto exchanges do not impose daily price limits like traditional stock markets. However, in some regulated or regional exchanges, daily price bands may exist. In the context of unrestricted markets like Binance or Bybit, reaching a daily limit may instead refer to a scenario where the price surges significantly—often over 10% or more in a single day—indicating strong buying pressure. When such a surge occurs on the daily chart, especially after a monthly breakout and weekly MACD golden cross, it acts as a powerful confirmation of bullish momentum. Traders should examine volume spikes during the surge to validate the move. A high-volume green candle closing near its high reinforces the strength of the breakout. This event often triggers short squeezes and FOMO (fear of missing out), accelerating upward movement.

How to Confirm the Confluence of These Three Signals

The real power of this strategy lies in the confluence of multiple timeframes. A trader should not act on any single signal in isolation. Instead, the alignment of the monthly breakout, weekly MACD golden cross, and strong daily price surge increases the probability of a sustained uptrend. To confirm confluence:

• Check that the monthly candle closes above the downward trend line with volume higher than the previous three months.
• Ensure the weekly MACD line has crossed above the signal line and remains above it for at least one week.
• Verify that the daily price has exhibited a strong upward move, ideally with a long green candle and volume at least 1.5 times the 20-day average.
• Use on-chain data such as exchange netflow (decreasing supply on exchanges) or rising active addresses to support the bullish thesis.
• Monitor funding rates on futures markets to ensure the rally is not overly leveraged, which could lead to a sharp correction.

This multi-layered confirmation reduces the risk of false signals and enhances confidence in the trade setup.

Step-by-Step Guide to Executing the Trade Setup

Once all three conditions are met, traders can proceed with a structured entry and risk management plan.

• Wait for the monthly close confirmation: Do not act until the monthly candle is fully closed and confirmed above the trend line.
• Monitor the weekly MACD: Ensure the golden cross is stable and the histogram is expanding upward.
• Identify the daily breakout candle: Look for a daily candle with a strong close, preferably near the top of its range.
• Enter on the next daily open or pullback: Instead of chasing the surge, wait for a minor retracement to a support level, such as the 5-day or 10-day moving average.
• Set a stop-loss below the recent swing low on the daily chart or below the monthly trend line to protect against a reversal.
• Use position sizing based on risk tolerance—never risk more than 1-2% of the trading capital on a single trade.
• Scale in gradually: Allocate a portion of the position at entry and add more if the price continues to show strength.
• Track key resistance levels on the weekly and monthly charts to anticipate profit-taking zones.

This methodical approach ensures disciplined execution and minimizes emotional decision-making.

Common Pitfalls and How to Avoid Them

Even with strong signals, traders can fall into traps. One common mistake is acting too early—entering before the monthly candle closes or the weekly MACD stabilizes. Another is ignoring volume, which can lead to false breakouts. Over-leveraging during a surge is also dangerous, especially in volatile crypto markets. To avoid these:

• Use alerts on trading platforms to notify when monthly candles close or MACD crossovers occur.
• Review historical volume patterns to distinguish real breakouts from low-volume fakes.
• Avoid margin trading during the initial phase of the setup unless using tight risk controls.
• Stay updated on macro factors such as regulatory news or Bitcoin halving events that could influence the broader market.

Patience and verification are key to avoiding costly errors.

Frequently Asked Questions

What if the monthly breakout happens but the weekly MACD hasn’t formed a golden cross yet?

Wait for the weekly confirmation. A monthly breakout without supporting momentum on the weekly chart may lack follow-through. Monitor the MACD for signs of convergence and avoid premature entries.

Can this strategy be applied to altcoins as well as Bitcoin?

Yes, but with caution. Altcoins are more volatile and prone to manipulation. Ensure the altcoin has sufficient liquidity and trading volume. Cross-check with Bitcoin’s trend, as most altcoins follow BTC’s direction.

How do I draw the downward trend line correctly on the monthly chart?

Connect at least two clear swing highs with a straight line. Extend it forward to see where future price action interacts. Use logarithmic scale if the price range is wide to avoid distortion.

Is a daily limit up move necessary, or can a strong green candle suffice?

In markets without formal limits, a strong green candle with high volume is sufficient. Focus on the strength of the move—closing near the high and volume surge—rather than a specific percentage.