Bitcoin [BTC] Volume Indicator Tracking Break-Outs since 2018
The fractal analysis of Bitcoin [BTC] price with the Klinger Oscillator reveals that the indicator has acted as a strong signal in the past.
While Chaikin Money Flow (CMF) uses the weighted average of the price and volume over a specified period of time, KVO implements something called a Volume Force [VF] which is more helpful in long-term trends.
These two indicators have been successful in tracking the trends in Bitcoin quite successfully.
Let’s being with the 2017 Top
The KVO indicator bearish cross occurred right at the top during in December 2019. While the CMF ratio was in a downtrend in the next couple of weeks, the signal did not turn fully bearish until March. Hence, KVO was quicker in perceiving a reversal that the CMF.
Later in 2018, KVO was again quick to see the bullish reversal at the just around the bottom as well. The green marker before the beginning of 2019 signals a buy at a price which is now a dream for many.
Evolution of Derivatives Market
Things changed after 2018, the derivatives market took control of the markets. However, the organic flow of money is still a robust signal for long-term trends. This is though has been dominated by CMF so far.
In 2019, we witnessed lesser movements in the KVO indicator, but CME could adequately tap the break-out and reversals in the market. Presently both CMF and KVo indicators are indicative of a surge in buyers.
Where are Are Now?
The crash on 12-13th March was an outlier for the investors which saw a huge panic-driven sell-off in the market. The Klinger Volume Oscillator fractal with the 2018 bear market could provide an insight as to why we can expect another parabolic run from here.
The breakout implies that the buyers are back in action, it will be interesting to watch how the market reacts when the traders begin to book profit. An interpolation of the parabolic run in 2019 reveals that a target towards the ATH at $20,00o is probable. Moreover, like 2019, we can expect a built-up of short orders around the previous high around 14,000 which can provide the fuel for the last leg of the run.
The trading view links of the chart can be found here.
On the trading plan, we again can draw out similarities with the 2019 run. The charts reveal that the initial parabolic run was broken at $9,500. Nevertheless, after a brief period of consolidation, the price continued to move upwards. The equivalent bullish invalidation levels here currently are at $11,355. Until then, correction or consolidation in a scalping range seems more probable.