Using The Volume Profile
I have been a trader in the Kucoin coin (KCS). I downsized my position into the run up to ~20 but kept 10%. Needless to say, I wished I'd sold all of it near the top. On 5-6 June it made a sharp move up. It caught me off guard, and I wasn't sure what to do. It was against the overall market direction. Do I let it run thinking it will go back to 20? The market didnt seem ready for that. Do I sell it, and still make profit on my original trade?
To answer the question, I had to formulate where I thought it was headed following the first big move up on Jun 5-6. Often times the price takes a rest after a big move so I had at least a day to evaluate. I used the volume profile tool to make my decision because trendlines and fibonacci's didnt tell me any reason why it paused at 13-14. The volume profile indicates that a very large % of coins were bought between 12.5-14.5. Those coins went deep into unrealized loss with the market correction where there was fear and strong emotion. One of the main impediments to a market rally after a long and deep correction is that many of these owners will have lost faith in the coin, and in the market. They will be very happy to just break even if they can.
When KCS tried to rally again after 5 days and stopped on the .618 fib, I decided to sell my remaining KCS. As a trader, it wasnt a huge decision, but the satisfaction of using the correct tool to make the correct market analysis was satisfying. I use the volume profile tool very often. I feel it may be the most underrated analysis tool. Combined with simple market psychology, it can be an invisible line of support or resistance that not many people dont see amongst their complicated trend lines, ichimoku clouds, Bollinger Bands etc.
BTW, Kucoin is forming a nice cup and handle.
To answer the question, I had to formulate where I thought it was headed following the first big move up on Jun 5-6. Often times the price takes a rest after a big move so I had at least a day to evaluate. I used the volume profile tool to make my decision because trendlines and fibonacci's didnt tell me any reason why it paused at 13-14. The volume profile indicates that a very large % of coins were bought between 12.5-14.5. Those coins went deep into unrealized loss with the market correction where there was fear and strong emotion. One of the main impediments to a market rally after a long and deep correction is that many of these owners will have lost faith in the coin, and in the market. They will be very happy to just break even if they can.
When KCS tried to rally again after 5 days and stopped on the .618 fib, I decided to sell my remaining KCS. As a trader, it wasnt a huge decision, but the satisfaction of using the correct tool to make the correct market analysis was satisfying. I use the volume profile tool very often. I feel it may be the most underrated analysis tool. Combined with simple market psychology, it can be an invisible line of support or resistance that not many people dont see amongst their complicated trend lines, ichimoku clouds, Bollinger Bands etc.
BTW, Kucoin is forming a nice cup and handle.
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