1. In theory. – Volume (trading volume) can simply be understood as the volume of money traded in a certain time frame of a coin (1h, 4h, 24h, 1W, ..). In the crypto market often, the volume or observation is how many million dollars, billions of dollars in 24 hours. A simple way to measure Volume is the total number of coins bought and sold (amount successfully traded) in a specified time period. – From the Volume, it reflects the liquidity of a particular market, the coin we follow. Based on the volume and price, we can track the correlation between the past and present trading behavior of that coin. From there we can predict price movements, future cash flow trends, where is near the bottom and top to buy and sell to maximize profits. Liquidity is a concept that refers to the degree to which any asset can be bought or sold in the market without greatly affecting its market price. An asset is highly liquid if it can be sold quickly without a significant drop in the selling price, usually characterized by a large number of transactions (Wikipedia). We can understand the high liquidity of a coin as we buy or sell a large number of coins at the same time without causing the price to fall deeply or increase sharply. For example, a illiquid coin often has very long candlesticks when buying and selling a large number of coins or when there is news. The demand to buy or sell depends on the change in price. The price fluctuates up and down, so the volume also changes. And when the Volume fluctuates, the price of the coins also increases and decreases. Following this cycle, we can see a cohesive relationship between price and volume. From this relationship we can determine the trend of a coin as follows: – When the price increases, the liquidity increases (trading volume increases) => the trend continues to increase When the price increases, the liquidity decreases => trend reverses When prices fall, liquidity increases => the trend continues to decrease When prices fall, liquidity decreases => trend reverses – But sometimes these forecasts are not completely accurate because the coin market can The manipulation of the shark is huge. We can also predict these anomalies based on Wyckoff’s law of resulting effort. When liquidity is large (Volume is large), Price volatility is large => Normal When liquidity is large, Price volatility is small => Abnormal When liquidity is small, Price volatility is small => Normal When liquidity is small, price fluctuates Big move => Abnormal 2. In practice: We can see the chart on tradingview and see the price and volume on the historical data part of cryptorank. When I looked at the OP’s chart, when I first listed Binance, the price was 1 to 2 dollars and the volume was 1 to 2 billion dollars a week (see image 2). when the price drops to $0.4, the trading volume is around 200 million dollars a week and the sideway, this is the point to test the supply to prepare for pumd, this period can be determined to be near the bottom of this wave. June 2022 (price decreases, liquidity decreases, so the trend is likely to change direction). When the OP price goes to $1.9, the weekly volume of this price period is $1 to over $2 billion a week. OP’s second living bottom is December 2022. Now the price is 0.8 to 0.9 USD and the trading volume is about 200 million USD a week (price is falling, liquidity is decreasing, so the trend is likely to change direction). When OP price went up to $3 in April 2023 the volume was around $1.5 to over $2 billion a week and kept this volume for a few weeks without increasing and this was the top of wave 2. (see photo 3) Currently, the OP price in May 2023 is around $1.5 and the volume is around $400 million a week (price is down, liquidity is down, so the trend is likely to change direction). It can be predicted that this is also close to the bottom of the 3rd wave. (See image 4) Similarly see the chart image and the volume of image ID 5,6,7,8. At the time the list ID volume was around 200 million dollars per day. then the volume dropped to about 40 to 50 million dollars a day and the sideway price of 0.45 dollars. Then the price goes up to 1 dollar and the volume is now 400 to 500 million dollars a day, the peak of this wave. From the rule of effort, we see that large volume but the price at this peak is unusually small, that is the period when fish are taking profits and maintaining large volume to have liquidity but the price does not fluctuate much. from there we can also predict the top of the wave and take profits. Currently, the price of ID is about 0.45 and the trading volume is around 60 million dollars a day (price is falling, liquidity is decreasing, so the trend is likely to change direction). Predictably this is also near the bottom of the 2nd wave of ID. Similarly, new coins like APT, HOOK, top and bottom all appear volume and price signals so that we can predict as above. Note: Volume and price are just a part of many parts to help us invest profitably. You need to learn about tokenomics, onchain, news,…. Above is just the knowledge I know and apply. hope you pro read and teach. Hope you guys can catch the bottom for the next rising wave. Thanks admin for reviewing the post.
Source: Collector
