After many years in the cryptocurrency world, I have summarized 8 trading techniques based on 'volume' that will definitely help you!
1. Low Volume at Bottom - Signal of Accumulation by Major Players
① Principle: At the bottom, volume decreases and price stabilizes, selling pressure is weak, and shares are strongly locked in; major players quietly accumulate.
② Application: Pay attention, do not rush to enter; wait for an increase in volume before entering the market.
2. High Volume Without Price Increase - Warning of Distribution by Major Players
① Principle: At high levels, volume increases but price stagnates; a large amount of shares are sold off, and major players take advantage of high volume to distribute.
② Application: Holders should be cautious and consider reducing positions or exiting the market.
3. Increased Volume and Rising Price - Key to Continued Uptrend
① Principle: When prices rise, volume increases, new funds flow in, the bulls are strong, and the stock price has upward momentum.
② Application: Operate in the direction of the trend; if volume does not decrease during a pullback, consider adding to positions or holding.
4. Decreased Volume and Falling Price - Bottom Formation in Progress
① Principle: During a decline, volume decreases, selling willingness is weak, and bears are exhausted; the price is approaching the bottom.
② Application: Do not blindly cut losses; wait for confirmation signals of the bottom before making decisions.
5. Sharp Decline Followed by Slow Rise - Opportunity to Buy at Support
① Principle: After a sharp decline, a slow rise occurs; panic selling takes place, and the bulls recover; if support holds, it is an opportunity to buy.
② Application: Set stop-loss at support, buy on dips, and aim for previous high points.
6. Sharp Rise Followed by Slow Decline - Timing to Short at Resistance
① Principle: After a sharp rise, a slow decline occurs; bulls are exhausted, and if resistance is encountered, it can be a time to short.
② Application: Set stop-loss at resistance, sell on highs, and aim for the lower support level.
7. Increased Volume and Rising Price - Warning of Pullback
① Principle: After a significant rise with increased volume, profit-taking and liquidation pressure are high, and the price needs to pull back to digest.
② Application: Appropriately reduce positions to lock in profits, and wait for a pullback before re-entering.
8. Increased Volume and Falling Price - Rebound on the Horizon
① Principle: A sharp drop with increased volume leads to panic selling; after the release of emotions, bears are exhausted, making a rebound likely.
② Application: Aggressive traders wait for signals of bottoming; lightly position for a rebound and set appropriate stop-losses.
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