Our last chart we are using is about trend and volume. Within the upper hand of the chart we are using a moving average crossover strategy between a simple MA-5 line (grey dashed) and a simple MA-10 line (blue thick line). A crossover strategy is always lagging, so it is not particularly about the signals of this system, the red arrows (bearish cross between MA-5 and MA-10) and blue arrows (bullish cross between MA-5 and MA-10). However, this is telling us something about the trend.
Please note the increasing number of signals during September through November. A crossover system will never work in a sideways trend because of the whipsawing signals. So, such a phase is showing that there is no trend.
On the other hand, there are a large number of periods where we can identify a trend, the recent downtrend in March, the bearish cross at the 6th of March followed by the next bullish cross on the 10th of April between the MA-5 and MA-10. This rising trend ended at the 11th of May.
Nevertheless, this could be useful if you do not have a real plan about an entry or exit strategy. Furthermore, as a result of last year’s strong trends most coins where in unchartered territory, but when to get out ?
Last but not least volume, in the lower section of this graph. Volume leads price, this is one of the most important premises in technical analysis. What we would like to see is an increasing volume within a rise on absolute numbers, but also by moving above the 21-day moving average line of the volume. This is confirmed in November, December and January and recently in April and May.
A decreasing volume within a declining trend like February, March and May is telling us that this downtrend will stop somewhere followed by the next rise and does not announce the start of a larger bear market.
Please note the selling climax in January at the top in the market shown by the magenta circles. This was already a warning signal that a top was in based on volume. In combination with other technical analysis techniques you where possibly protected by the devastating decline in the weeks thereafter.