I'm a big fan of volume because I think it is the strongest indicator of a price movement's "commitment". Price and volume are raw data versus synthesized indicators capable of being manipulated to see what you want to see. I'd choose price and volume as my two indicators if I could only have 2.
I struggled with the recent pull back of BTC. It wasn't supposed to end in May and EVERYONE said so. A 55% retracement was also severe. As a professional trader, I strive to keep my funds making money or on standby to take advantage of a market opportunity. Investors HODL, but traders should always have funds to take advantage of market opportunities (This is a main difference between an investor and trader in my opinion). May's steep "panic" price drops with large volumes triggered me to sell all my crypto after the rebound to 57-58K. I took a lot of heat from that, but I stuck to my guns with 3 principles
1. Weekly price drops of 20% in a bull market aren't "ok" in a bull run. This was red flag #1
2. The volume was extreme. It was 2x the volume of a similar weekly correction in February. Red flag #2.
3. The rebound from the retracement stalled at .702 fib retracement AND the volume was average at best (bull market nobody wants 20% off? Hmmm)
Too be honest, there was other factors that led me to liquidate. I have a thumb rule....500% profit on anything will attract sellers no matter what the story is saying. BTC went up fast and hard over a relatively short period of time and it met my 5x thumb rule. In retrospect, the relatively high volume on the weekends during Asian market hours starting in March also told a story that showed up in volume. I didn't understand until later. Asians and Asian miners saw a storm coming from the Chinese government. We didnt know this at the time, but abnormal selling volume from that sector really started to have an effect on the overbought market.
As the next few months played out, I watched and waited for the bottom. I really put the work in to understand the market so that if a reversal happened, I would have a good chance to recognize it. Again, volume confirmed my analysis. The substantial reversal bar on July 21 had volume. I bought at 30 and 32K based on that 1 hr price and volume action. On July 22 & 23 I was looking for a follow thru day on large volume. The volume on those days was below average. I attributed that to buyers had no commitment because they didn't trust the reversal. However, short sellers got squeezed and futures got liquidated leading to a low volume price increase. The 24th and 25th showed increasing volume, and I started to add money into the alt coins (ADA, ETH, VET). July 26th was confirmation day for me. It was the day I was looking for. I loaded up on leveraged alt positions. BTC started knocking down hurdles from that point on.
From here, I continue to use volume to confirm the momentum. It continues to rise as it should in a bull market, and the dips are bought with volume. We are struggling through the dead cat bounce zone of the .5 fib retracement, but BTC keeps knocking down the hurdles.
One note: Kucoin shows volume in $. I much prefer that because its much easier to compare money spent across different price levels. For example, you might see 1/2 the number of coins traded at 60k than you do at 30k, but the amount of money being spent on BTC is the same.
I struggled with the recent pull back of BTC. It wasn't supposed to end in May and EVERYONE said so. A 55% retracement was also severe. As a professional trader, I strive to keep my funds making money or on standby to take advantage of a market opportunity. Investors HODL, but traders should always have funds to take advantage of market opportunities (This is a main difference between an investor and trader in my opinion). May's steep "panic" price drops with large volumes triggered me to sell all my crypto after the rebound to 57-58K. I took a lot of heat from that, but I stuck to my guns with 3 principles
1. Weekly price drops of 20% in a bull market aren't "ok" in a bull run. This was red flag #1
2. The volume was extreme. It was 2x the volume of a similar weekly correction in February. Red flag #2.
3. The rebound from the retracement stalled at .702 fib retracement AND the volume was average at best (bull market nobody wants 20% off? Hmmm)
Too be honest, there was other factors that led me to liquidate. I have a thumb rule....500% profit on anything will attract sellers no matter what the story is saying. BTC went up fast and hard over a relatively short period of time and it met my 5x thumb rule. In retrospect, the relatively high volume on the weekends during Asian market hours starting in March also told a story that showed up in volume. I didn't understand until later. Asians and Asian miners saw a storm coming from the Chinese government. We didnt know this at the time, but abnormal selling volume from that sector really started to have an effect on the overbought market.
As the next few months played out, I watched and waited for the bottom. I really put the work in to understand the market so that if a reversal happened, I would have a good chance to recognize it. Again, volume confirmed my analysis. The substantial reversal bar on July 21 had volume. I bought at 30 and 32K based on that 1 hr price and volume action. On July 22 & 23 I was looking for a follow thru day on large volume. The volume on those days was below average. I attributed that to buyers had no commitment because they didn't trust the reversal. However, short sellers got squeezed and futures got liquidated leading to a low volume price increase. The 24th and 25th showed increasing volume, and I started to add money into the alt coins (ADA, ETH, VET). July 26th was confirmation day for me. It was the day I was looking for. I loaded up on leveraged alt positions. BTC started knocking down hurdles from that point on.
From here, I continue to use volume to confirm the momentum. It continues to rise as it should in a bull market, and the dips are bought with volume. We are struggling through the dead cat bounce zone of the .5 fib retracement, but BTC keeps knocking down the hurdles.
One note: Kucoin shows volume in $. I much prefer that because its much easier to compare money spent across different price levels. For example, you might see 1/2 the number of coins traded at 60k than you do at 30k, but the amount of money being spent on BTC is the same.