Hi all
I covered DGD/BTC prior to the most recent breakout (35% increase), and noticed a Volume/Price divergence (as indicated by the VZO).
I've returned again to show you that the same situation is occurring on the H1 chart. Price has trended sideways (2% increase) over the last day, and yet the VZO is showing a huge buildup of bullish pressure. To me, this is a classic breakout signal. However, the indicator that shows us Bittrex long/short orders is highlighting that people are betting on a price drop. This doesn't mean they're right (or wrong), it's just something to be aware of. There's also the important point that it's a different exchange than what we're looking at, so that could explain the difference.
So in terms of a trade, if you're aggressive I think the signs are there for a breakout, so get in now. If you want to be more conservative, wait for a solid break upwards that is accompanied by a volume increase. I'd expect a breakout to retrace back to the previous high, so a potential increase of 30% on where we are now. The stop-loss is set under the lowest shadow of the current consolidation period (a day), which is between 5 and 6%. This is a safe level, as if the price falls that far then the likelihood is that I was wrong and the breakout is going down rather than up. I'm personally more than willing to risk 5% on this trade, but you should adjust based on your personal risk and money management strategy.
As an aside, it has become clear to me that DGD/BTC is a heavily manipulated market. It's a prime candidate for it, as it's such a low volume market. For a fundamental, long-term trader, that is bad news, as it means an individual (or individuals) are calling all the shots and determining what is happening. For a TA based, short-term trader like myself, it's brilliant. I'm happy to ride the breakouts up as long as they continue. That does, however, mean that this is a more volatile trade than usual, as a manipulated market is a less reliable market, so bear that in mind.
Let me know your thoughts on this one, and if you're interested in the power of the VZO indicator, look at it for the DGD/BTC market on a H12 chart since November, and tell me what you see. Huge signals there for the willing trader.
Until next time, good luck with your trading.
RJR
I covered DGD/BTC prior to the most recent breakout (35% increase), and noticed a Volume/Price divergence (as indicated by the VZO).
I've returned again to show you that the same situation is occurring on the H1 chart. Price has trended sideways (2% increase) over the last day, and yet the VZO is showing a huge buildup of bullish pressure. To me, this is a classic breakout signal. However, the indicator that shows us Bittrex long/short orders is highlighting that people are betting on a price drop. This doesn't mean they're right (or wrong), it's just something to be aware of. There's also the important point that it's a different exchange than what we're looking at, so that could explain the difference.
So in terms of a trade, if you're aggressive I think the signs are there for a breakout, so get in now. If you want to be more conservative, wait for a solid break upwards that is accompanied by a volume increase. I'd expect a breakout to retrace back to the previous high, so a potential increase of 30% on where we are now. The stop-loss is set under the lowest shadow of the current consolidation period (a day), which is between 5 and 6%. This is a safe level, as if the price falls that far then the likelihood is that I was wrong and the breakout is going down rather than up. I'm personally more than willing to risk 5% on this trade, but you should adjust based on your personal risk and money management strategy.
As an aside, it has become clear to me that DGD/BTC is a heavily manipulated market. It's a prime candidate for it, as it's such a low volume market. For a fundamental, long-term trader, that is bad news, as it means an individual (or individuals) are calling all the shots and determining what is happening. For a TA based, short-term trader like myself, it's brilliant. I'm happy to ride the breakouts up as long as they continue. That does, however, mean that this is a more volatile trade than usual, as a manipulated market is a less reliable market, so bear that in mind.
Let me know your thoughts on this one, and if you're interested in the power of the VZO indicator, look at it for the DGD/BTC market on a H12 chart since November, and tell me what you see. Huge signals there for the willing trader.
Until next time, good luck with your trading.
RJR
Comment:
So it ended up coming, but a number of days later! The reason it occurred was the same (bullish volume build up), but I broke my golden rule by focusing on a short-term time frame and not looking at a higher time frame. It's a timely reminder that everyone makes mistakes :)
We've almost reached the support level of the previous breakout, so to me that's a critical level and one I'll be watching very closely.