Relation between volume and price? | Bitcointalksearch.org

kmarinas86

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Quote from: tell_lie_vision on April 24, 2013, 06:08:36 PM

In technical analysis volume is used as a confirmation indicator. You may notice that the epic rally of the early april didn't took much volume at all which probably signaled a certain weakness. On the other hand the volume spiked really hard on the 12th of april and that was clearly a sign of the continuation of the downward trend.

https://i.imgur.com/Ubos4bs.jpg
On the 16th of april we had a lovely hammer candlestick formation which usually predicts a reversal. Strong volume indicated that the smart money successfully accumulated a huge position at the best price.

Drops tend to be sharper than rallies. That is why volume might work as an indicator. If we assume that the big investor is also the wiser investor, then your explanation could make sense.

kmarinas86

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Quote from: torba on April 24, 2013, 05:28:07 PM

Is there a relation? Does high volume often indicate that bitcoin will change it's price more drastically?

The average price of a BitCoin, if I understand correctly follows the following equation:

Price of an average BitCoin = Total Market Capitalization of All BitCoins / Number of BitCoins

If people are selling BitCoins for more than they paid for it, the price goes up. If people are selling BitCoins for less than they paid for it, the price goes down.

"Price of an average BitCoin" is just layman's way of saying "Weighted Market Price of BitCoin".

Volume is just how much buying and selling going on. It doesn't tell you if people are selling up the price or selling down the price.

tell_lie_vision

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Quote from: Gaman on April 24, 2013, 07:05:36 PM

so as I understand, the generation of new bitcoins becomes slower and slower.. right?

no, we are talking about the daily trading volume at MTgox exchange. The same applies to other exchanges as well.

Quote from: odolvlobo on April 24, 2013, 07:02:17 PM

Sorry, I was being lazy with the terminology. 3/6 and 4/19 are actually called "shooting stars, but they also predicted reversals that did not happen.

oops, I didn't checked them all. 3/6 looks more like a shooting star. Reversal didn't happen but there was a little drop in price during the next day.
4/19 should have a bit longer upper shadow (at least twice the length of the real body of the candle) in order to be considered a shooting star.

Gaman

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so as I understand, the generation of new bitcoins becomes slower and slower.. right?

odolvlobo

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Quote from: tell_lie_vision on April 24, 2013, 06:46:29 PM

Don't get me wrong.
Hammer candlestick formation works only after a downtrend. To find them we look for the dips.
Those candlesticks that you've mentioned are hammers, indeed , but they are not located properly , so there is no hammer formation there

Sorry, I was being lazy with the terminology. 3/6 and 4/19 are actually called "shooting stars, but they also predicted reversals that did not happen.

tell_lie_vision

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Don't get me wrong.
Hammer candlestick formation works only after a downtrend. To find them we look for the dips.
The candlestick that you've mentioned (4/12) is hammer, indeed , but it is not located properly , so there is no hammer formation there

odolvlobo

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Quote from: tell_lie_vision on April 24, 2013, 06:08:36 PM

On the 16th of april we had a lovely hammer candlestick formation which usually predicts reversal. Strong volume indicated that the smart money successfully accumulated a huge position at the best price.

How is this for a grain salt: of the 4 "hammer candlestick formations" on the chart above (3/6, 4/12, 4/16 and 4/19), only one predicted correctly. 25% success is fail.

MAsilverbug

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Quote from: odolvlobo on April 24, 2013, 06:09:54 PM

Quote from: torba on April 24, 2013, 05:28:07 PM

Is there a relation? Does high volume often indicate that bitcoin will change it's price more drastically?

No. There is no correlation and no relation, and don't believe any of the nonsense that the technical analysis people will write.

you mean, take it with a grain of salt

Mastergerund

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Does Mt-gox report volume in number of transactions, or in number of bitcoins transacted? Ie, are 0.10 BTC 10x count as 1 or 10 in their volume reporting? Should be 1.

odolvlobo

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Quote from: torba on April 24, 2013, 05:28:07 PM

Is there a relation? Does high volume often indicate that bitcoin will change it's price more drastically?

No. There is no correlation and no relation, and don't believe any of the nonsense that the technical analysis people will write.

tell_lie_vision

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In technical analysis volume is used as a confirmation indicator. You may notice that the epic rally of the early april didn't took much volume at all which probably signaled a certain weakness. On the other hand the volume spiked really hard on the 12th of april and that was clearly a sign of the continuation of the downward trend.

https://i.imgur.com/Ubos4bs.jpg
On the 16th of april we had a lovely hammer candlestick formation which usually predicts a reversal. Strong volume indicated that the smart money successfully accumulated a huge position at the best price.

torba

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Is there a relation? Does high volume often indicate that bitcoin will change it's price more drastically?

Topic: Relation between volume and price? (Read 543 times)