Good morning, traders. Volume precedes price. The frustration among traders is reaching an almost frenzied level. Retail traders, especially in crypto, are not patient and this is why they tend to lose a lot of their capital. They tend to have strong opinions that are weekly held, rather than weakly held. What I mean is that they tend to fip-flop between bullish and bearish rather than trade the chart and this causes them to enter positions poorly and/or exit them emotionally. They tend not to wait for setups to complete, rather they jump in out of boredom, emotionally hoping that the trade goes their way. But there is little room for hope in trading. Without a trading plan you are guaranteeing the loss of your capital over the long term. So where does this leave us today? Well, since price is just moving sideways, I decided to pull out the line chart as I have done on occasion.
Here we have the BLX daily line chart. Line charts connect plotted points with lines. These points are the period closes (in this case, daily closes). Charting in this way removes a lot of the noise that can result in paralysis analysis when looking at candle charts. The purples lines denote the large descending wedge that has been printing throughout this correction. We can also see price printing an ascending triangle from the purple wedge support to it's resistance. I've heard a lot of nonsense talk about the volume being low. As I have said many times before, simply saying volume is "low" or "high" means absolutely nothing. "Low or high compared to what," is what you want to know, as well as any patterns that may be in play. We can clearly see that price has been printing this ascending triangle and that volume has increased on the moves from support to resistance while, overall, dropping. Smaller movement between lows and highs result in decreasing volume and volatility until price breaks out. Volume and volatility are dropping because price is coming to an apex. Looking at it another way, even though price is dropping overall due to the ascending triangle whose apex price is moving toward, we see greater volume in general when price is near the top of the triangle and lesser volume in general when price is near the bottom of it. This tells us that there is much more interest around $4000 than there is around $3100.
Speaking of volume, let's take a look at OBV (on balance volume), also known as the smart money indicator. This is a volume flow momentum indicator which give us an indication of whether volume is flowing in or out. OBV rises if the current period's closing price is higher than the previous period's (current period's volume is added to previous period's volume) and drops if the opposite occurs (current period's volume is subtracted from previous period's volume). Because the indicator is cumulative, the actual number shown on OBV doesn't matter, but what does matter is the slope of the line. What we are watching for is divergences between price and OBV. If price is dropping or remaining flat but OBV is rising, then this suggests that smart money (professionals) are buying while retail is selling and that price will head up. If price is rising but OBV is dropping, then this suggests that smart money is selling while retail is buying and that price will head down. We can see that price has failed to print a new higher close since February 23rd, but OBV has continued to rise, breaking its overhead resistance on March 14th. As mentioned, this suggests that smart money is likely buying what retail is selling and should lead to a new higher close. Currently OBV remains above the 20 day EMA, but if we see OBV closing below it then it should be considered a signal that price may be preparing to head lower. This is also a larger TF, so we could see a quick move down and then back up which wouldn't negatively affect this outlook. As always, this is just one indicator and traders who utilize indicators should never rely on just the one. It should always be used in conjunction with other indicators and/or price action/volume analysis. What I am most interested in regarding OBV on the daily TF is whether OBV continues to rise, overall, if we see a price drop toward the ascending support.
I will add a few other TFs below to give a more near-term look at what's going on, but you will be able to see why you should be waiting for confirmation before entering. There are a lot of conflicting signals at the moment, and even a drop may just be sudden with a similar hard rise immediately following. So, even if you were waiting for the drop into the mid-$3000s, would you be able to get your orders filled? There is a lot to consider at this time depending on your TF that you are planning on trading.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
Here we have the BLX daily line chart. Line charts connect plotted points with lines. These points are the period closes (in this case, daily closes). Charting in this way removes a lot of the noise that can result in paralysis analysis when looking at candle charts. The purples lines denote the large descending wedge that has been printing throughout this correction. We can also see price printing an ascending triangle from the purple wedge support to it's resistance. I've heard a lot of nonsense talk about the volume being low. As I have said many times before, simply saying volume is "low" or "high" means absolutely nothing. "Low or high compared to what," is what you want to know, as well as any patterns that may be in play. We can clearly see that price has been printing this ascending triangle and that volume has increased on the moves from support to resistance while, overall, dropping. Smaller movement between lows and highs result in decreasing volume and volatility until price breaks out. Volume and volatility are dropping because price is coming to an apex. Looking at it another way, even though price is dropping overall due to the ascending triangle whose apex price is moving toward, we see greater volume in general when price is near the top of the triangle and lesser volume in general when price is near the bottom of it. This tells us that there is much more interest around $4000 than there is around $3100.
Speaking of volume, let's take a look at OBV (on balance volume), also known as the smart money indicator. This is a volume flow momentum indicator which give us an indication of whether volume is flowing in or out. OBV rises if the current period's closing price is higher than the previous period's (current period's volume is added to previous period's volume) and drops if the opposite occurs (current period's volume is subtracted from previous period's volume). Because the indicator is cumulative, the actual number shown on OBV doesn't matter, but what does matter is the slope of the line. What we are watching for is divergences between price and OBV. If price is dropping or remaining flat but OBV is rising, then this suggests that smart money (professionals) are buying while retail is selling and that price will head up. If price is rising but OBV is dropping, then this suggests that smart money is selling while retail is buying and that price will head down. We can see that price has failed to print a new higher close since February 23rd, but OBV has continued to rise, breaking its overhead resistance on March 14th. As mentioned, this suggests that smart money is likely buying what retail is selling and should lead to a new higher close. Currently OBV remains above the 20 day EMA, but if we see OBV closing below it then it should be considered a signal that price may be preparing to head lower. This is also a larger TF, so we could see a quick move down and then back up which wouldn't negatively affect this outlook. As always, this is just one indicator and traders who utilize indicators should never rely on just the one. It should always be used in conjunction with other indicators and/or price action/volume analysis. What I am most interested in regarding OBV on the daily TF is whether OBV continues to rise, overall, if we see a price drop toward the ascending support.
I will add a few other TFs below to give a more near-term look at what's going on, but you will be able to see why you should be waiting for confirmation before entering. There are a lot of conflicting signals at the moment, and even a drop may just be sudden with a similar hard rise immediately following. So, even if you were waiting for the drop into the mid-$3000s, would you be able to get your orders filled? There is a lot to consider at this time depending on your TF that you are planning on trading.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
Comment:
This H4 chart (Bitstamp) shows more bearishness at the moment than bullishness. We can see the ascending channel that price has been printing as well as the local TR. Within that local TR, price has failed to really get above the EQ, which makes upward movement suspect at this time. There are two breakdown targets labeled: the first is based off the height of the local TR which then leads into the second, based on the height of the ascending channel. Both end in demand zones as shown. A breakdown will likely provide a move down to the first target, bounce back up to retest the ascending channel support as resistance, and then the final move down to the lower target. H4 RSI also has room to drop some more and is bearish at 45, but it is printing a descending broadening wedge which recently had support touched, suggesting it should be heading toward resistance now. MACD is bearish below center line and the signal line. That being said, if price happens to break upward suddenly (and there is a distinct possibility it could as OBV currently shows a break above the previous resistance level at the February 23rd price high), it should be targeting the ascending channel resistance. If price continues through that resistance, then we should be looking at the $4420/$4460 level as a target.
Comment:
The H12 chart (Binance) shows a large ascending broadening wedge and smaller ascending wedge at its support. It also shows price sitting on the H12 pivot as well as the 21 EMA. A breakdown of the wedges provides a target at the S3 pivot/61.8% retracement level. H12 RSI shows it approaching support around 50, inside the triangle.