Volume in relation to future downmoves

4H chart analysis on Bitfinex

1/8/18

ELD occurred after the 1st major leg down from a major high (20k) and precipitated the 1st minor leg of the 2nd major leg.

ELD closing in bottom half

23.4k volume

1st ELD from major swing high (away from the ultra volume bottom formed on 12/22 and after two ELDs near that bottom)

First swing down from low of ELD bar was 32% and occurred in 7 days and constituted the end of the 2nd major leg of the down move.

A 3rd Major leg eventually came making the total drop from ELD 56% (The first 32% drop included and ELD of 17k and 5 down bars of 23k-28k. 3 of these bars occurred in the middle of the swing and closed near in the upper half signaling MM buying but the consecutive nature of them showed that the MM were seeking even lower prices. Two occurred near the bottom and the last of which was a major 2 bar reversal. The action that occurred in this area was also breaking through the previous ultra high volume low established on 12/22/17. The subsequent rally was 42%.

 

1/15/18

ELD occurred within the 2nd major leg down from a major high (20k) and precipitated the 2nd minor leg down of the 2nd Major leg.

ELD closed in bottom half

17k Volume

2nd ELD from major swing high but 3rd ELD near the ultra volume bottom of 12/22/17

Swing down from ELD low was 27% and occurred 1.5 days later

A major consolidation period of almost 13 days occurred after this ELD appeared before the 3rd major leg down occurred. The bottom of the 3rd major leg constituted a 52% drop from the ELD low.

 

1/30/18

ELD occurred after the 2nd Major leg down from a major high (20k) and precipitated the 1st minor leg of the 3rd major leg.

ELD closing near the bottom

3rd ELD from major swing high and 3rd ELD near the range of the ultra volume bottom of 1/17/18

Swing low from ELD low was 22% and occurred 3 days later

The 2nd minor leg occurred 4.5 days after the ELD appeared and led to another drop of 23% from the 1st low and a total of 40% drop from the ELD low. There was no ELD closing in the bottom half until past midway into the 2nd leg, however there was a 29k down bar closing near the middle that attached the low of the 1st leg. This was followed by 3 consecutive down bars; the 3rd of which was the afore mentioned midway ELD bar that closes near its low below the low of the 1st leg. This is a good indication of further downside (there was 20% more downside before the bottom was eventually found)

 

 

 

I’ve noticed that a relatively large spread bar closing on the bottom half and accompanied by large volume that comes near a swing high (or an ELD) is a precursor in future btc downmoves.

Further, the location and volume size of the bar seems to give more details of an impending fall. Of course if price is in a major trend, the fall will be limited, and if in a downtrend then the fall will be elongated.

For example if the ELD has volume of 15k-21k and occurs in the first or second leg down of a move, then

If the ELD has 22k+ volume and occurs in the first or second leg then expect a move of

 

When to not use ELDs

I’ve noticed that after an Ultra volume bottom forms, it takes a few ELD type moves near that bottom to break through it. So when mapping ELD’s, don’t listen to the first 1 or 2 ELDs that occur near that Volume bottom. Only listen to the ELDs that occur near the high of significant rally off of the bottom, if such a rally occurs, and a position should only be taken until the bottom is nearning. Chances are it will bounce near the bottom. Once there is a significant dropoff in demand and 2 ELDs near the bottom have already occurred, then you may want to trust the next ELD.

Also, a high volume downbar of this nature that occurs near the bottom of a move is not and ELD. The E stands for “early,” which means from the start to before the midpoint of a move from the high/consolidation breakdown area.

 

When No Demand bars come into play

When it’s a downtrend and you start seeing clusters of no demand bars with volume of 2-5.5k on the 4h chart that get confirmed, its about time the next down leg is starting. It’s around 12-19k on the 12 hour chart.

 

Each of the swing lows of this bear market has been around 40% from the rally high/high before breakdown. If you drop price from the 3/5/18 point of breakdown 40%, you only get halfway into the meat of the previous ultra volume low. To get to $5000, price would have to drop by 57% from the breakdown point. However, with the amount of volume on the ELDs from the breakdown point, it may be possible. It’s also possible that this is just a test of ultra volume area.

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Trend analysis

The trend is very important indeciding direction. If the trend is down then chances are it’s going to continue going down. Especially if the background shows that a big high velocity and high volume drop came from a high. And/or if it broke a rising trendline with volume, especially if price was weak and didn’t touch the top line of that rising channel, it’s probably going down.

If it shows very strong SOS at the bottom of the swing then it may rebound or turn around, but if it’s only the first major leg down, it probably will continue down past the SOS area eventually after a rally up. If it’s the second leg down and the volume is very high on the initial downmoves, it’s probably going down for a third leg.

If volume of a rally heading back up toward the upper trendline resistance is low compared to the rest of the pattern, it is probably heading back down again to test or break the previous low.

When bitcoin looks ready to move, close out of some or all of your altcoin positions. They will generally not go up with bitcoin

*Take what the chart gives you

Using the big picture, take what the chart gives you. You want a good VSA signal in the direction of the trend, and without any limiting possibilities from other disciplines you’ve learned.

If there isn’t a chart that gives you that, don’t take any trades.