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 an exponential EMA-5 line (magenta dashed) and an exponential EMA-13 line (blue thick line). A crossover strategy is always lagging, so it is not particularly about the signals of this system. However, this is telling us something about the direction of the trend.
Please note the increasing number of signals in the last quarter of 2019. A crossover system will never work in a sideways trend because of the whipsaws between the moving average lines.
On the other hand, when a trend is developing you see these moving average lines rolling over, just like the end of February this year. The longer EMA-13 was topping and the EMA-5 crossed below the EMA-13 line. This was an early warning signal of increasing risk.
This strategy could be helpful in finding the exit within a long or short position. Please remember the strong upward trend in plenty of coins a couple of years ago. You will never Sell at the top within an uptrend and Buy at the bottom of a downtrend, but these moving average lines could help you in letting your profits run and cutting your losses.
Last but not least, volume. You can find this in the lower section of this graph. Volume lead price, this 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 May last year. Furthermore, we also saw an increase of selling volume around the top of June 2019.
The recent selling climax in March marks the end of the downtrend and we should be focused in the making of a bottom. This shows that the bulls are capitulating. The close above the EMA-5 line a few days later was the confirmation that prices have bottomed.