Bitcoin volume and momentum predict impulse buildingTLDR On Balance Volume 10 and 20 SMA Rossing bullish below the 100 SMA is mega bullish, the Stoch RSI above 80 confirms momentum is shifting. In the idea text ADX also looks hella bullish. Impulse to $41-50k very likely next couple of months before stall.
Introduction
I got my start trying to swing trade on 2018 on bitcoin. Before then I was pretty lucky at buying and holding, as many of us are, and tried to step up my game. I got wrecked pretty bad. I later complete miss the April Fools Day pump of 2019 and watch in doubt for months as Bitcoin rallies to a lower high in June 2019.
I spent a lot of time trying to see why I missed the uptrend and found the On Balance Volume with SMA indicators by mattzab and I learned its strengths and its weaknesses (it is kinda hard to look for bearish volume divergences on a asset that has flow like bitcoin does).
I renewed my understanding of the basics like zooming out to higher time frames and use of simple momentum indicators like the Stoch RSI or using common pairing of indicators, like the Parabolic SAR and the ADX.
All that to say a big move to the upside is very likely.
Main Chart
The similarities between the 2019 and current 2022 bottoms are very clear on this set of indicators and price action. Bitcoin is basing out and showing strength after some long tern topping structure. The 2018 low was proceeded by a yearlong descending triangle and the 2022 low was preceded by a double top that took over a year to play out.
Price and the Stochastic RSI
The blue circle shows that price where price has been slowly strengthening and the orange circle shows that the Stochastic RSI has breached above 80. When that happened in 2018 the indicator ran across the top for several periods before having a massive pump.
On Balance Volume with SMAs
While the Stoch RSI was climing the On Balance Volume was also strengthening and showing bullishness. Generali accumulating when the OBV is below the 100 SMA is a good idea. Even better, if you have trust in the project, when both the 10 and 20 OBV both get below the 100 SMA. That is a sign you are in a deep and painful bear market and you are buying what other people don't want.
Waiting to see the 10 and 20 cross bullishly under the 100 SMA means we have confirmation that volume as transition's to the bulls at least temporarily. It is possible for some double and triple crosses to appear. That means it is an even longer accumulation period which suggest an prolonged uptrend once the indicators and price fully turn bullish.
More cautuious traders can wait tull the OBV is above the 100 or when the 10 and 20 OBV also get above the 100 EM.A. This does not get them the best prices but does get them in the trade when volatility has picked up.
.
The Second Chart
Parabolic SAR and ADX
The ADX and Parabolic SAR are often combined into the same chart. I currently favor a weekly chart for the ADX and a monthly chart for the Parabolic SAR. This gives me the sensitivity I desire on the weekly timeframe but keeps me alert to where major stalls or reversals in a move could occur.
With the D+ and D- converging on one another a cross is very likely. It is very high probability when taking into consideration the main charts bullishness. A cross of the D+ and D- means a move to the monthly SAR is very likely. It also seems likely that price will have a stall in the red zone based off of previous support and resistance. I am going to use any potential stall to look at alts that are showing relative strength and rotate into them.
That massive pump broke the long term downtrend of resistance shown in black and then price pumped to the red zone. For our 2022 bottom we have not seen a return to the red zone in over six months. A stall here could mean several things. Price could run beneath or at the red zone sideways and strengthen or it could impulse above all time high and then spend time confirming the previous all time high as support deep into the red zone. It way to soon to be sure.
Linked Ideas and my operating assumptions
These have not changed for a couple of months. The "OG" coins that did not set higher highs during the last crypto bull will set higher highs. Most of the top runners of 2021 will still be in consolidation for this cycle but we may still see a stand out. Some new coins like Optimism will have their first bull markets and go crazy then have over 90% draw downs.
