Selecting coins based on trading volume, with a success rate of 85% right from the start, took more than half a year. By only using trading volume to select coins, even beginners can learn and understand!
The method of 'increasing volume then decreasing volume to enter' is a stable and strong pattern developed through years of repeated practice. Below, we will delve into the actual process of this method, and once learned, it can provide a viable path for trading coins.
1. The connotation of increasing volume
An increase in coin price accompanied by an increase in trading volume indicates strengthened bullish forces. The larger the volume, the stronger the market's optimistic sentiment; at this point, it can be identified as a characteristic of the main force entering the market.
2. The connotation of decreasing volume
After an increase in volume, if the trading volume suddenly decreases the next day, it indicates a reduction in market divergence, and the forces of bulls and bears tend to balance. This is often a critical moment where the price is about to change direction.
3. Identifying increased volume
The phase of increased volume occurs when the price breaks through important resistance levels or adjusts to relatively low levels. Select a significant single-day trading volume, excluding assets with continuous volume increases over several days. Importantly, this increase in volume should be a significant growth compared to previous trading volumes.
4. Identifying decreased volume
After confirming the phase of increased volume, one must patiently wait for a decrease in trading volume. Decreased volume does not mean that the trading volume must drop to a very low level, but rather that it has decreased relative to the increased volume phase, accompanied by reduced price fluctuations, forming a relatively stable consolidation characteristic.
5. Timing to enter
When the coin price forms support near the MA5, traders can begin to formulate their entry plans. They can choose to enter when the price re-increases in volume or when there are clear reversal signals.
6. Timing to exit
After a continuous rise for a period, if the price undergoes a significant adjustment, and the RSI touches above 80, followed by a downward pullback in the price line, one can exit in batches.
7. Summary
The method of entering after increasing volume then decreasing volume is a technical analysis based on changes in trading volume. It requires traders to have sufficient filtering skills, and patience not to act without them. The cryptocurrency market is a marathon, not a sprint. Only through consistent practice can one move forward steadily.
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