I was out enjoying myself holding short when this was happening, as I expected lower.
I did not get the chance to have a closer look at the volume indicator on Coinbase, which is what I really should have done, as it would have allowed me to buy the bottom. But we all have stuff to do.
Now my opinion on the market does not really matter as we have to keep re-analysing what is happening on the chart to look for clues as to whether the current analysis may be right or wrong.
In this case, we can analyse Volume entirely using the indicator.
So what do we see here?
In the yellow circle, we have an initial Selling Climax, which CAN occur in Accumulation.
We know it can also occur in Re-distribution, so this is not enough information. However, we can also be wary of an upthrust. I know it's okay to buy before Upthrusts too! So this doesn't really matter, just changes the length of time and height of target of the Long trade.
Anyway, we have a second touch, higher then the first, where equal selling volumes failed to push price lower.
In this case, we wait for more clues.
In the white circle, we have lower volumes of selling, but still constant selling with what looks like no buying.
We wait for more clues...
Now in the Blue circles, we have, once again, 2 equal points of selling volume where the 2nd one did not push price lower.
Since we have already had our Selling Climax, now it is likely we could be in either Upthrust stage if Redistribution, or Secondary Test stage if Accumulation.
Either way, we should be expecting price to go up soon after this has happened a 2nd time.
Now, the market broke a very important structure, so at this point I would be wary of Longs at this point. Not enough evidence has happened. A small Long would have been okay.
Now next, we have a 3rd confirmation point. In the light yellow/orange circle, we have a weak selling volume push down, and price continued to go up with not much selling.
I could, at this point, increase my position as my confidence grows.
As price rose through the Orange square box and retested it, the retest was with low selling volume.
This could increase my confidence even more, and I could even add a little more to my position if I wanted to.
Always keeping my Stop Loss below the bottom here.
Now, since I was thinking the market would drop and this could just be an Upthrust, I would probably have closed my Long position in the late 25k's, as I knew SOME liquidity is likely to be taken out at least.
However, if you are Bullish, this would have been a great Mid term Swing trade.
Nevertheless, either way, the Short position higher up was quite obvious to me, and this would have allowed me to Take Profit in a fantastic zone and switch sides.
But we are not always staring at the charts, we have lives to live.
However, if I do see this LIVE, then I can react accordingly.
This is one of the many reasons why the Volume Indicator is THE ONLY indicator I use nowadays.
I did not get the chance to have a closer look at the volume indicator on Coinbase, which is what I really should have done, as it would have allowed me to buy the bottom. But we all have stuff to do.
Now my opinion on the market does not really matter as we have to keep re-analysing what is happening on the chart to look for clues as to whether the current analysis may be right or wrong.
In this case, we can analyse Volume entirely using the indicator.
So what do we see here?
In the yellow circle, we have an initial Selling Climax, which CAN occur in Accumulation.
We know it can also occur in Re-distribution, so this is not enough information. However, we can also be wary of an upthrust. I know it's okay to buy before Upthrusts too! So this doesn't really matter, just changes the length of time and height of target of the Long trade.
Anyway, we have a second touch, higher then the first, where equal selling volumes failed to push price lower.
In this case, we wait for more clues.
In the white circle, we have lower volumes of selling, but still constant selling with what looks like no buying.
We wait for more clues...
Now in the Blue circles, we have, once again, 2 equal points of selling volume where the 2nd one did not push price lower.
Since we have already had our Selling Climax, now it is likely we could be in either Upthrust stage if Redistribution, or Secondary Test stage if Accumulation.
Either way, we should be expecting price to go up soon after this has happened a 2nd time.
Now, the market broke a very important structure, so at this point I would be wary of Longs at this point. Not enough evidence has happened. A small Long would have been okay.
Now next, we have a 3rd confirmation point. In the light yellow/orange circle, we have a weak selling volume push down, and price continued to go up with not much selling.
I could, at this point, increase my position as my confidence grows.
As price rose through the Orange square box and retested it, the retest was with low selling volume.
This could increase my confidence even more, and I could even add a little more to my position if I wanted to.
Always keeping my Stop Loss below the bottom here.
Now, since I was thinking the market would drop and this could just be an Upthrust, I would probably have closed my Long position in the late 25k's, as I knew SOME liquidity is likely to be taken out at least.
However, if you are Bullish, this would have been a great Mid term Swing trade.
Nevertheless, either way, the Short position higher up was quite obvious to me, and this would have allowed me to Take Profit in a fantastic zone and switch sides.
But we are not always staring at the charts, we have lives to live.
However, if I do see this LIVE, then I can react accordingly.
This is one of the many reasons why the Volume Indicator is THE ONLY indicator I use nowadays.