Hello Traders. After yesterday's mildly successful pump, we were again met with a strong rejection off of the prior double top - now creating a triple top. What does this mean? Well, it can mean a lot of things, but let's leave all of the technical analysis behind and find one other way to find the tops in terms of price action. I would like to introduce to you the 'NVT' Indicator (Network Value Transaction Value). This indicator is particularly interesting to me due to the fact that it has either called for consolidation, or, retracement within the timeline. One thing for sure is, if it does consolidate, we can see that it eventually leads to a retracement.
What is the NVT Signal? Predicting bubbles in any sort of market is not easy whatsoever, but, with more data indicators rising on the horizon, we can start pulling data in all sorts of ways to find the 'relative tops'. Now, I chose this NVT indicator due it's relative simplicity in visualization, but complex calculations of the market. But for the sake of the post, I will only show it from a visual perspective to show how it works instead of going into all of the calculations.
The NVT indicator (also known as the NVT ratio) became popular after Bitcoin printed the All-Time High last December 2017. There was no prior data nor any way to predict the bottom of the Bitcoin market due to it's price discovery to the general public; however, one indicator that was able to predict the 'relative top' was the NVT - which existed back then.
Standard NVT Ratio is simply the Network Valuation divided by the Transaction Value flowing through the blockchain and then smoothed using a moving average (MA). As we can see, the past few years has also shown that the NVT indicator was proven extremely useful.
What we can pull from this data is that although this indicator proves usefulness in calling tops, we can also now use this as some form warning signal when the NVT goes into the yellow territory on the oscillator.
To break it down, we are seeing two types of indications:
1. We can be in some form of 'consolidation' phase, 2. We can be in some form of 'retracement' (dump) phase.
This alone, proves that this indicator is more than enough to use as a trading indicator, considering all factors of the market.
These are not the only ways to trade the NVT indicator. I’m sure a seasoned trader could come up with some additional ways to trade it and decipher the indicator in a better way.
Trade Safe. X Force
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great overview of the bitcoin price action.
I agree with you. we should get a pullback soon.
XForceGlobal
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@ProjectSyndicate, Thanks a million! Not a matter of IF, it's a matter of when :)!
immysl
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This indicator looks very interesting. Thanks for shining a light on it :)
XForceGlobal
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@immysl, Thank you immysl, as always!! appreciate it. I hope this indicator gets well known - it's a very good indiactor!
totoroha
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the timeframe that you used is 1D. Will it be able to used in smaller time frame such as 1HR, 4HR?
XForceGlobal
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@totoroha, Excellent question toto. So I have been doing some small adjustments on the timeframes. Yes, it is very possible to trade this on the 4H, but not so much of the 1H as it seems inconsistent. I believe as we go up on the higher timeframes, it collects more data which makes it more reliable in terms of finding a consolidation or dump phase. Here is the current state on the 4H, which has proved to be reliable. We saw a ~17% dump:
GDBitcoin
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hello, where can I find this NVT indicator please? Is it featured here in tradingview's indicators list? I looked for it but cannot find it. Pls advise. Thank you
moksongmin
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I haven't seen this indicator so far. It seems pretty useful. Thanks for the insight!
XForceGlobal
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@moksongmin, Thanks Mok, I hope this insight gives you some clear guidance on what you can be doing in terms of getting the positioning for your future trades :) We are all waiting for you to be back!!
moksongmin
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@XForceGlobal, yes, this was pretty helpful! I will be back soon!
I agree with you. we should get a pullback soon.