Staying Ahead: Current Conditions & Bitcoin Volume Analysis

Updated

As most of you know, I focus a lot on volume analysis. I believe that volume precedes price and if there is a solid predictive method to do Technical Analysis it is through volume. However keep in mind every indicator lags in some kind of shape & form. The difference with volume analysis is you can analyze the actual supply and demand, this allows you to have an advantage over the market by taking what actually moves price and being one of the first in line to ride the direction. Cryptocurrency trading will be on another competitive level once other analysts figure this out.

Divergences are extremely useful with Volume analysis as the errors that do occur with these plays are 99% of the time visible on another time frame. (Which is why confirmation is so imperative) Divergences with the RSI or STOCH for example do not always play as seen due to the fact that volume will ultimately decide the markets direction, not the algos of trading bots and market makers.

In the overview below I will break down the analysis based on each indicator across the different time frames one by one. I will not be explaining the functions of each indicator, so please read and study the past publications I have done on TradingView to understand these indicators. Also there is many other signals available from other Volume indicators but I happen to like the consistency of the O.B.V. and the C.M.F. so i will focus on those two.

Keep in mind this is a very broad overview of market conditions on high time frames.

Daily OverviewChaikin Money Flow (C.M.F.)
As seen on the daily above & below we show extremely heavy sell pressure, the few times we have ever seen this heavy of pressure was always under $1,000 per Bitcoin, this is a new market however with new market conditions and psychology. Every time we reached this level or lower, it was the market low, we are currently resting above the low of $6,000 from February. What this tells me is we are NOT at the market low based on that pattern from the past. The $6,000 wick from February 2nd had little sell pressure that ultimately created another rally, at the time the market was still in disbelief and bought it right up, now the market consensus is very apprehensive and cautious. See below for the example.
On Balance Volume (O.B.V.)
We show a very clear divergence here in favor of a bearish move. Other than the fact that we were at $1,000 last time the O.B.V was this low there is nothing much to note here on the daily.
12 Hour OverviewChaikin Money Flow (C.M.F.)
As can be seen below the C.M.F. has a very slight increase from the prior low, it is not substantial enough to trade a long position from this view. The risk reward is much more heavier on the short side considering our trend is Bearish and the price gap is much higher percentage wise, this actually labels this as a bearish divergence.
On Balance Volume (O.B.V.)
The O.B.V. shows an actual decrease in Volume further backing the divergence label on the C.M.F.
2 Hour OverviewChaikin Money Flow (C.M.F.)
Jumping down to the 2 hour, buy pressure has increased showing a potential Bullish move incoming. If you were to trade this you would definitely need confirmation from other indicators in addition to studying the past market moves at this level, and how they interacted with resistance levels..

Note

On Balance Volume (O.B.V.)
Generally speaking here the O.B.V. compared to past levels looks Bullish, this backs a short term long position that was spotted on the C.M.F. I would still be cautious and use additional analysis to confirm entries and exits. The higher time frames override the lower ones and it would be very easy to get caught in a bad position since the Daily shows a bearish trend still, keep this mind when scalping. On a note, I do place trend lines on the O.B.V., they are generally loose and simply allow me to see where a breakout or breakdown may occur.

1 Hour OverviewChaikin Money Flow (C.M.F.)
Yet another reason why timeframe confirmation is so important, zooming in on a slightly smaller time from the 2 hour the C.M.F. show a decrease in the buy pressure. Local resistance was rejected on the attempted rally and buyers are now selling from that attempted breakout and failure.
On Balance Volume (O.B.V.)
We generally align here, however, it does look nasty as the O.B.V. is now in the negative, the last time this happened on the Hourly was in April of last year. One Major thing to note is the O.B.V. shows different figures on Bitfinex, I have my own theories on why that is though.
On these Hourly charts, notice we are almost resting on support, we will need to see an increase in sell pressure from current levels to break below that.
15 Minute OverviewChaikin Money Flow (C.M.F.)
As mentioned above we need an increase in sell pressure to break down, this is why. Taking a look at the 15 minute, the C.M.F. is increasing but staying at the same price level. This is the market buying up the support levels we are approaching.
On Balance Volume (O.B.V.)
The O.B.V. looks to be in trouble here, not healthy whatsoever. It counteracts the C.M.F. analysis on the same time frame and typically I would verify on multiple exchanges, however I am running out of room in this analysis.
ConclusionBasing the analysis ONLY on Volume, the higher time frames still show a bear trend is active. As with all analysis you should never just use one method to trade upon, you need to confirm everything with multiple time frames and indicators, that being said Volume analysis weighs heavy on my decisions.

I expect a slight uptick in price action within the local trend, this is based on the fact that the market will attempt to buy this local dip up but ultimately and (fairly quickly) it will subside. This is not a position that i would open a long in though, the risk reward is too high on the risk side. We appear to be in an area that will continue sideways for a bit unless we see some heavy buy pressure. The Bears are in control right now and the general market seems to be in a panic every moment they incorrectly buy a rally. This has been creating some solid sell offs, hence the reason the Daily looks so heavy on the sell side.

Thank you for reading and please support by clicking like on this analysis, don't forget to to follow me on all the other sites I publish on listed at the end of this publication. Like, follow, share and interact to help me stay motivated to keep these going. There are too many analysts with the "TOP" tag here that post very generic analysis and I intend on taking their spot. Thank You!

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