How to use the VPVR Indicator

Good morning fellow Cryptionians!

Not much has changed, but the chart has just confirmed the analysis of my previous post. As we can see from chart 1 which represents the daily time frame (attached), we are still bound in the symmetrical triangle [point 1], which means we could still go both ways.

As mentioned yesterday, BTC has bounced back from the symmetrical triangle lower level and rebounced up, it looks like in the next days we might retest the upper line of the triangle. If we move down and we break the lower triangle boundaries we could be re testing the lower support levels at $32,500 x BTC USD and even lower at the $30,000USDT. I would be personally cautious and wait for a confirmation to add to my positions.

Many alt coins are moving up. We have been moving down for such an extended period that with a look at the daily chart, in my view a move towards the upside has a higher probability to happen then a movement on the downside. But please trade cautiously, we are not out of the woods yet. We need confirmation that we have negated this bearish downtrend move and we are moving to greener, and more profitable pastures.

Now the next part is more relevant for traders, than long term holders…

With all the great coins I bought at a discount at around the BTC $34,400 mark, (using the technique I shared in the last post) I will have to wait to see if scenario 1 plays out (breaking through the symmetrical triangle formation at $38,500) or if we are going to retest the lower level at around $34,500. If I have confirmation that we are going back down to retest, I will sell those previously bought coins at a profit, and buy back at the lower support level (buy low, sell high). If not, I will wait to see if the next resistance at $40K gets smashed or it gets rejected, and then make my move.

The strategy mentioned in the previous post works when the market is channel bound, moving up and down between two prices or sideways.

STRATEGY FOR TRENDING MARKETS:  If we are in a strong trend, then I use another strategy which is I buy the corrections and build little by little my position. These positions are sold if the trend is negated. In the previous few weeks, this was when we started forming lower lows and lower highs and passed below the 200MA. This strategy of building your position can be used in both bull and bear market. By adding slowly to your position each time there is a pull back, you are reducing your risk and maximizing profits.

I will introduce you to another technical indicator: the VPVR. The Volume Profile Visible Range.

These are the Yellow and Blue horizontal bands on the right of the attached charts. The VPVR indicator, displays trading activity over a specified period and plots a histogram on the chart .This reveals dominant and significant: price levels based on volume , in essence gives a clear indication of Supply or Demand at a certain price rather than volume in a certain period.

Why is this important? Because the market makers, big institutional traders etc., like to access these pools of activity and liquidity and tend to spend time at these levels or bounce from them. This can be a vital tool for traders that buy and sell crypto on a daily, weekly and monthly basis.

In Chart 2, which represent the 4 hour time frame, we can see that:

* The MACD [1]: is increasing in upside momentum, which is bullish.

* The TDI is slightly higher, which is bullish.

* The Stochastic blue line is also starting to move back over the red line, which is also a bullish signal.

* The RSI [4] is on a positive uptrend angle, which is bullish.

As we can see from the VPVR indicator we have been stuck at around the $37,393 level and that’s one reason why we have hit and re bounced back from that level many times. We can also see that there is not much interest on the downside, but there is on the upside. At $44,000, $49,642 and $57,300 USD per Bitcoin. So, expect the market to bounce back to these levels before moving higher if an uptrend is re-established.

 If you are trading these levels just look for confirmation on a movement before exiting or entering trades, by looking at the other indicators like the Stochastic and RSI.

IMPORTANT: The VPVR changes a bit based on time frames. So make sure you are looking for smaller time frames to see more liquidity pools, supply and demand and bigger time frames for a bigger picture.

Of course this is what I am doing, and does not constitute financial advice.

Trading is 90% about Mindset and Mastering of your Emotions and 10% about Technical Analysis. Knowledge without control over your emotions, only compounds and magnifies losses.

So take this roller-coaster ride, as your personal JEDI training!

Some good pointers from another trader Phillip Konchar

* Develop an effective morning routine.

* Never stop learning.

*Always have your losses under control. Develop effective risk management rules.

*Keep a trading journal. Spot common mistakes and fine-tune your trading strategy.

*Observe others. Replicate successful strategies and learn from the mistakes of other traders.

*Control your emotions. Don’t get overly emotionally attached to a trade and practice your trading discipline.

* Remember that the market is neither moral nor immoral – it’s amoral. Losses are nothing personal, and even professional traders take a hit from the market from time to time.

Be well, be positive, stay strong, remember trading and investing is

Have a great day

Much Light

Paolo