When You Must Feel Nothing - Diary of a Crypto Educator
How do you feel today?
When you're a trader, this is a question you should ask yourself each and every day. If you feel discouraged, step back. If you feel overoptimistic, step back. If you feel sad, step back. If you feel today you must make a lot of money because you need to urgently pay a bill, step back. Do you know what you should feel before hitting that Buy or Sell? Nothing. This is the hardest part. You can read tons of books about technical analysis, markets, psychology, and whatever
We can define anomalies as cases where candles and volume don't match.
Here's a quick example:
1) The first highlighted candle is bearish. The body is relatively narrow, and the volume is relatively low. Nothing wrong here.
2) The second highlighted candle has a much larger body, but it looks like there starts to be a mismatch with the volume, which is not so high compared to the previous day.
RED FLAG.
3) The third candle is bearish. The volume is higher, and the body of the candle is narrow.
The long lower wick might indicate the following: insiders tested the market. Initially, they didn't see enough interest from the market and brought the price up.
The market is somewhat interested but not ready to drive prices lower. Our intuition with the red flag was right. Chances are the next candle will be bullish, but if the volume doesn't support it, it will be just a momentary rebound.
Insiders tested supply, but the high volume might indicate a rebound - if you have a look at my last post, it should be part of a corrective wave.
Moreover, the following candle should be observed under the Effort vs. Result Law - the decreasing volume should produce a candle with a narrower body, but in this case we have an anomaly.