Crypto Minor Analysis - Secret behind volume revealedToday, I’m going to share something that’s a bit of a secret among those in the know. I will shed some light on the first secret today, which is the volume.
The first topic for today is the volume. What you see is a chart that’s a combination of 10 minor cryptos weighted based on the volume to create a single chart for us to analyze. This is part of my basket trading strategy, and it simplifies our ability to analyze the market as a whole. If you want to try it yourself, enter the following formula under formula search.
COINBASE:LINKUSD*0.13305821039743082+COINBASE:GALAUSD*0.12394231389047493+COINBASE:ALGOUSD*0.10611537837627316+COINBASE:ICPUSD*0.10146860688530698+COINBASE:SPELLUSD*0.09992529126504314+BINANCE:DOTUSD*0.09822597440163378+COINBASE:MATICUSD*0.0918195299233388+COINBASE:LTCUSD*0.08937436372851348+COINBASE:MIRUSD*0.07848016918237494+COINBASE:CGLDUSD*0.07759016194960995
Please take a look at the areas of very high volume that I’ve highlighted. See something telling? Combine this with something like ZigZag indicators, and you will be immediately able to tell market reversals. You don’t need a complicated set of indicators; you only mainly need volume. VSA analysis is a great thing to learn.
Like me, you might wonder why we see these high volume spikes, especially at market bottoms? General physics applies to all things in life, and the price isn’t any different. A body in motion tends to stay in motion unless an opposing force is applied. The more momentum towards a direction there is, the more force that’s required to change the direction. Volume is that energy. Sometimes we don’t need high volume to change the price. This happens when the momentum has decreased and we see that at market tops and also at bottoms and we can call this trend exhaustion. When there is exhaustion, what does that mean? That means that direction is taking a break, traders have taken profit and are no longer interested in staying at that level. However, this could mean the bullish trend is intact as no force was applied.
Now to today’s analysis.
If you take a look at my Crypto Majors bucket analysis (to be posted later today), you will see that the major’s experienced a market top the first week of April with very low volume. However, the Minors experienced a very high volume. This is because the minors exhibited higher momentum and due to pressure from the Major’s price exhaustion, traders took their profits and sold the Minors.
On April 11th we saw somewhat of a high volume spike. This volume could be sufficient to reverse the market due to the overall bullishness. However, I would like to see a bigger volume spike to concretely tell me that the bottom is here. We should see this next week as there is a bit more room for the price to fall without breaking the bottom trend line.
However, volume alone isn’t enough to tell us everything. Speed and velocity play a crucial role because that’s how we can measure the momentum. I will share that another day.
Based on my complete system, prices for these minors have the potential to fall about 10% more unless we see the high volume that sets the reversals. What we see with the minors is that they follow the Majors with a delay. That delay is what causes the high volume registration because of its trend-following nature.
Not trading advice, sharing for educational purposes.
