Updated
BCC/BTC - Volume/Price Divergence - 8-10% Swing Opportunity
BCC/BTC is now exhibiting a Volume/Price divergence, and has been for the better part of a day.
Using the VZO Indicator, which is a leading indicator, gives us an idea of bulls vs bears action in the market. A divergence such as this demonstrates that there are a lot of bulls (and therefore upward pressure on prices) that haven't yet been reflected in the price action. Given this, we look to enter once a strong upward movement is determined. Usually, I wait for a green closing candle (and a strong close relative to total trading range for that period), and then set a conditional buy order above the high of the previous candle. E.g. if the previous candle's high was 0.133300 (such as BCC 0.11% looks like it will), I'll set a conditional buy at 0.133700. This hopefully will catch any potential movement up - price movements based on a Volume/Price divergence can be extremely quick - and prevents us from being bounced into the trade via a high shadow candle.
Look to enter this trade at 0.133700 - 0.134700, and then set a stop loss below the lowest closing price (which at the moment is 0.130303). This is a very tight stop loss (3.5%), but it's preferable to take a small loss on a volatile movement such as this.
Time is of the essence with these! So get in quickly.
Note: the last candle was a hammer candle, and the current candle has ranged high (and low), so this could go either way yet. Always exercise caution. You're better off missing a few % points of profit to negate the risk of a loss.
Using the VZO Indicator, which is a leading indicator, gives us an idea of bulls vs bears action in the market. A divergence such as this demonstrates that there are a lot of bulls (and therefore upward pressure on prices) that haven't yet been reflected in the price action. Given this, we look to enter once a strong upward movement is determined. Usually, I wait for a green closing candle (and a strong close relative to total trading range for that period), and then set a conditional buy order above the high of the previous candle. E.g. if the previous candle's high was 0.133300 (such as BCC 0.11% looks like it will), I'll set a conditional buy at 0.133700. This hopefully will catch any potential movement up - price movements based on a Volume/Price divergence can be extremely quick - and prevents us from being bounced into the trade via a high shadow candle.
Look to enter this trade at 0.133700 - 0.134700, and then set a stop loss below the lowest closing price (which at the moment is 0.130303). This is a very tight stop loss (3.5%), but it's preferable to take a small loss on a volatile movement such as this.
Time is of the essence with these! So get in quickly.
Note: the last candle was a hammer candle, and the current candle has ranged high (and low), so this could go either way yet. Always exercise caution. You're better off missing a few % points of profit to negate the risk of a loss.
Note
Given the volatility in crypto markets at the moment, I'd exercise additional caution. Investor psychology and fear is playing a bigger role in price action than TA at the moment.Trade active
Trade well and truly active. My conditional buy order was activated, so I was in at 0.133700. Price is currently 0.13581875. Look to ride this one out until you detect weakness in the movement (I use indicators such as the VZO, a momentum oscillator, and closing candle sentiment - basically, where the candle closes relative to its trading range.)
Note
I can't seem to post a snapshot (?) of the current chart. But price is trending sideways along our buy in price.Most interestingly, the VZO/Price divergence is still active, and has been confirmed again within the last hour. It'll be interesting to see what happens from this point.
It's worth noting again that the general craziness in crypto land is adding additional volatility. So, the indicators and signals are sound, but it may very well go the other way. Keep a close eye on it.
Note
Big drop in the last few hours, but I'll be holding until it reaches target levels or it hits my stop loss. Have a look at this chart link: Note
Well, we almost hit stop-loss, but not quite, so the trade is still active.Volume/Price divergence has declined, but is still on an upward trend, indicating the potential for future rises.
We're almost at a point where bullish and bearish behaviour collides. Basically, this means there's a great deal of pressure from above and below, and only one can win. The one that does win usually enjoys a strong and quick price movement in the relevant direction. Bears have to be favourites given the overall downtrend (which 7/10 determines the victor) but there's increasing signs of underlying strength for BCC.
Note
Since almost hitting our stop loss we're now sitting at 4% profit. I'll be moving my stop loss up to just under break even level. There's still a possibility of triggering this via a trailing shadow, but this is a fairly long hold for this kind of trade. Generally, VZO/Price divergences rocket up over the course of 4-5 hours, whereas this one has dragged on a bit due to the overall crypto market. I'm still bullish on this trade, but I'm reducing my risk level to zero to negate any downturn. Any profit we make from this point is a bonus.The charts are still moderately positive for us, with some underlying weakness that we will negate via a break even stop loss. The VZO is the best signal we have that prices SHOULD continue to work their way upwards.
Trade closed: stop reached
I ended up taking 4.0% profit after moving to some tighter stop losses once I detected some weakness on the 15 & 30min charts. Lucky, too, as it went on a bit of a downturn after that. It may bounce back from Ichimoku support, but I think it's done its dash for a day or so.Not the profit I was hoping for, and not the type of one you would normally get from a VZO/Price divergence as strong as what we saw. But that's the crypto market at the moment!
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.