Global liquidity TRUMPS price action

2023년 7월 24일

A week ago I had a little exchange with someone on Reddit who was claiming that Bitcoin would be shooting up. The analysis was purely technical, using pitchforks and trends, and I was surprised by their level of conviction in the prediction. Here's a snippet of my response:

I find it interesting when I see trade ideas based on price movement. Market structures can tell you where certain levels are, but it doesn't tell you much about the propensity of a move until it's well underway, no?

This is the point I'm repeating to others while I drill it into my own head. In the rock, paper, scissors game of trading, liquidity beats technical analysis. TA can give you the shape of the river, but it does not tell you how much water is flowing through it.

Last week, I pointed out that even though we had an overall bullish flow signal, that a the countertrend dip signal should be heeded.

Countertrend dips and bounces turn into liquidity trend changes if they persist. When those show up, it's a time to start taking profits. If it is indeed a short-term move, then TA and subsequently Flow will point this out, at which point leaning into the overall trend makes sense.



While the last move was waiting for the countertrend dip to play out (or short it down to the seasonal current), now the trade is waiting to see what is happening with liquidity. A green bounce suggests a run up to 35K, while a red ebb might call for a fall to 22.5K.