When a trader has looked at charts long enough, it can become a kind of meditation, and he learns to notice the tiniest changes.
He uses the price graphs to determine the state of the market much in the way of a Tibetan doctor. He takes the market’s pulse and feels its condition: weakness or strength, activity or sleep, greed or fear, decisiveness or uncertainty.
The market, like an open book, reveals every detail about itself, you just need to know how to listen and understand…
What a minute can do
Saturday early morning on the Bitfinex exchange, at 1.36 a.m. EST, in the course of one minute there was a large volume of direct sales — 2400 BTC. In this very brief interval, Bitcoin price changed by 7.30 percent.
Let me say that again: it was a 7.30 percent change in asset price within one minute!
At the same time, on other exchanges, no such activity in BTC/USD could be observed. For example, let’s look at the Coinbase chart. Here, the candles are of the usual size and volume, nothing out of the ordinary...
Consider all time frames
So why are we looking at the minute-long chart? Because for a full understanding of the situation, we need to consider all time frames. In some cases it’s important to see the nature of the purchases and sales, the briefest touches of levels, the reaction of the price when approaching these levels, and so on.
This way, in daily candles you could watch for the signs of a reversal or a continuation of the trend and make a strategic decision; the hourly candles could give confirmation of the hypothesis; and the smaller frames (M15, M5, M1) will show the best way to enter or exit a transaction.
Symbolically, on large timeframes we are looking at the horizon, and on the small ones we see what is happening under our feet. Here, strategy and tactics, a telescope and a microscope, a double bass and a violin do not contradict, but complement each other.
The market diagnosis
We are not going to wonder what happened that morning. Whether those were the actions of a manipulator or a some casual seller in China booked some profits for New Years presents, it does not matter. What matters, is that one sales impulse for one asset pulled the entire market behind it.
The secret methods of the Tibetan doctor lead us to the understanding that Bitcoin remains a benchmark for the entire cryptocurrency market, and the Bitfinex exchange is the platform on which this benchmark manifests itself.
But if we do want to play the detective and imagine that Bitfinex is purposefully working on in shaping the market moods, we have to admit that it’s quite successful. So how can we take advantage of a sudden dump and cooling in the market?
It's very simple …
At the same time with demonstrative Bitcoin sales on the top exchange, large purchases of other assets on the same exchange and on other exchanges are being made through pending orders. After all, this is the only way in which big players can accumulate a large volume at a good price, and their logic of entering and exiting a position differs from crowd logic. They buy on the decline and sell during growth.
For us, it remains to observe the transpiring events, not to forget the methods of the Tibetan doctor, and to make the correct trading decisions.
Wishing all readers a good day and profitable trades!