Bitcoin's Volume Looks like Bearish Dominos about to fall
This is a very busy hybrid chart but I hope to break it down so you can see what I see. In short, a bearish situation in several volume indicators is going to cause a cascade as one causes another to trigger and we get all kinds of bearish synergies.
I have found that you can use the ichi-cloud and the volume profile very well together. They both have a lot of trade concepts in common, such as price action going to edge to edge on the cloud and price action going edge to edge on the volume range, cutting through low volume nodes to the next high volume node, or varying between the point of control and a value area. Also, when the cloud is thick you hope to see a high volume note and when the cloud is thin you hope to see a low volume node
The chart is set to show testing of the rising blue support line in April, 2017. You can see that long red wick. and I want to know what happened volume wise from there. Price action went absolutely parabolic after the upper volume area was tested as support in September of 2017 and after the top near $20,000 price action was under the upper volume area, testing it as resistance, and below the cloud. This brings in the OBV EMAs
The OBV EMAS have turned bearish and first pair of purple boxes shows what happens when the 100 EMA asserts itself as resistance on the 10EMA. A very violent sell off indeed. The second purple blue box and purple question mark shows the potential that this failed break through could happen again. Should the 10 get rejected off the 100 and break through the 20 EMA there will be a violent sell off, and I say that with about 90% certainty.
Why so high? The question mark shows the price action is getting rejected off of the upper ichi cloud and the upper volume area. With the basic edge to edge principles we should expect the price action to have a fair chance of going to the lower edge of thru cloud first, and from there there is another fair chance we go to the point of control.
If the price action goes edge to edge on the ichi-cloud then that basically guarantees that the OBV 100 EMA rejects the 10, causing the 10 to bearishly corss the 20 within the next month or so. That is a big couple of domino to fall
Finally there is the Money Flow Index with settings I have found very useful. The fast MFI, set to 15 just went to over-bought, price action is at at resistance, and it is bearishly divergent to the peak between Man and June of 2019 with BTCUSD topping at 14,000. A casual looks suggests that the fast MFI has a fair chance of going from over-bought to at least around 50. Once again, that would predict the OBV 100-10 rejection most of this post is focusing on.
Right now the main thing stopping this cascade is the price action is still towards the top of a bearish ichi-cloud. I am clearly not optimistic that will hold. This 3 day candle has about 4 hours before it closes. The next three candles, and I hate to say it, are ironically crucial for the future of bitcoin. Two out of three green candles and price action hops on top of the value area/blue triangle and we go to the moon. The OBV EMAs crosses bullish and we are off to the races while the MFI goes to almost 100. Chances of that happening I feel are single digits at this point. Who reads the news about the corona virus and China falling down and thinks this will cause a pump? What is the fundamental cause for optimism in the broader market? My linked post shows we are at the top of the 3d bollinger band and makes the case for at least moving to the bollinger band baseline. Even more bearish dominoes.
The majority scenario is we are more likly to get 2 or 3 day red candles coming up and everything goes down. The two main questions I want to see is if we find support at the bottom of the cloud and we consolidate for longer before choosing a direction and second, does this sell off somehow fund alt-season? I see a lot I like for ethusd and ethxbt to the upside but that may be a different post.
Looking at the daily chart it seems that bearish divergence on the MFI will drive us into the cloud. This causes the OBV cross shown by the arrow to be at a high chance of not being sustained. Price action is still at the Upper Value are and I don't think we are getting on top of the value area/triangle with bearish divergent MFI.
I have found that you can use the ichi-cloud and the volume profile very well together. They both have a lot of trade concepts in common, such as price action going to edge to edge on the cloud and price action going edge to edge on the volume range, cutting through low volume nodes to the next high volume node, or varying between the point of control and a value area. Also, when the cloud is thick you hope to see a high volume note and when the cloud is thin you hope to see a low volume node
The chart is set to show testing of the rising blue support line in April, 2017. You can see that long red wick. and I want to know what happened volume wise from there. Price action went absolutely parabolic after the upper volume area was tested as support in September of 2017 and after the top near $20,000 price action was under the upper volume area, testing it as resistance, and below the cloud. This brings in the OBV EMAs
The OBV EMAS have turned bearish and first pair of purple boxes shows what happens when the 100 EMA asserts itself as resistance on the 10EMA. A very violent sell off indeed. The second purple blue box and purple question mark shows the potential that this failed break through could happen again. Should the 10 get rejected off the 100 and break through the 20 EMA there will be a violent sell off, and I say that with about 90% certainty.
Why so high? The question mark shows the price action is getting rejected off of the upper ichi cloud and the upper volume area. With the basic edge to edge principles we should expect the price action to have a fair chance of going to the lower edge of thru cloud first, and from there there is another fair chance we go to the point of control.
If the price action goes edge to edge on the ichi-cloud then that basically guarantees that the OBV 100 EMA rejects the 10, causing the 10 to bearishly corss the 20 within the next month or so. That is a big couple of domino to fall
Finally there is the Money Flow Index with settings I have found very useful. The fast MFI, set to 15 just went to over-bought, price action is at at resistance, and it is bearishly divergent to the peak between Man and June of 2019 with BTCUSD topping at 14,000. A casual looks suggests that the fast MFI has a fair chance of going from over-bought to at least around 50. Once again, that would predict the OBV 100-10 rejection most of this post is focusing on.
Right now the main thing stopping this cascade is the price action is still towards the top of a bearish ichi-cloud. I am clearly not optimistic that will hold. This 3 day candle has about 4 hours before it closes. The next three candles, and I hate to say it, are ironically crucial for the future of bitcoin. Two out of three green candles and price action hops on top of the value area/blue triangle and we go to the moon. The OBV EMAs crosses bullish and we are off to the races while the MFI goes to almost 100. Chances of that happening I feel are single digits at this point. Who reads the news about the corona virus and China falling down and thinks this will cause a pump? What is the fundamental cause for optimism in the broader market? My linked post shows we are at the top of the 3d bollinger band and makes the case for at least moving to the bollinger band baseline. Even more bearish dominoes.
The majority scenario is we are more likly to get 2 or 3 day red candles coming up and everything goes down. The two main questions I want to see is if we find support at the bottom of the cloud and we consolidate for longer before choosing a direction and second, does this sell off somehow fund alt-season? I see a lot I like for ethusd and ethxbt to the upside but that may be a different post.
Looking at the daily chart it seems that bearish divergence on the MFI will drive us into the cloud. This causes the OBV cross shown by the arrow to be at a high chance of not being sustained. Price action is still at the Upper Value are and I don't think we are getting on top of the value area/triangle with bearish divergent MFI.
And I promise every Floridian that you will all be rich... because we're gonna print some more money! Why didn't anybody ever think of this before?
~Nathan Explosion
~Nathan Explosion
