Thoughts on LPTUSDT and why im bearish

2023년 8월 31일

Often times in crypto if you can find a fractal or structure repeating it can give you a hint into what is coming next for a different coin showing signs of the same pattern repeating. I dont have an official trade on this one i just think its something i find useful to trade with and thus i am sharing with you what i see

If you look at the comp/usdt pair you can see the INSANE amount of volume created on the 20D candle it is also more clear on the 40D timeframe you can see a this was a buyer capitulation and this is very useful information because Price will ALWAYS move the direction of least resistance! Therefore, a LARGE green candle with abnormally large amounts of volume is a good sign that the asset is overbought and will sell off and bearish engulf. The same can be said about a LARGE red candle with abnormally large amounts of sellers. This is known as buyer/seller capitulation and signals tops and bottoms of coins.

Using this information is helpful on ALL timeframes but the higher the timeframe the more likely a reversal is.

Using this information and looking at COMP/usdt we can see that comp opened up the 20D candle after the buyer capitulation and wicked up and took liquidity and flipped red and has since sold off for about 40% decrease in value.

Looking at LPT/USDT we have a similar situation with a buyer capitulation and the 20D candle has flipped green here to most likely make a wick and revert back down to 4-5$

This doesn't necessarily give us an entry or an exit to a trade but using this information you can keep a close eye on price action and knowing the overall trend helps alot. With how similar these two look i would either wait for LPT to flip red on the 20D candle OR short from 8.25-9.2

The buyer capitulation tells us that the 9.2 area is a heavily sold area and a critical resistance for bulls to flip if it were to see any more upside

Not only can you use this information to take a potential short trade setup on the coin but IF LPT were to get ABOVE the 9.2 resistance and close on a higher time frame (Preferably the daily candle) then you could actually enter a long trade with a stop a little under 9$ and find targets above.

For me personally, I have found that using Volume is the most effective strategy when determining a trend and for me it has given the best results but obviously the more things you can find for confluence the better. Hope this is helpful to someone and dont be afraid to comment/dm me if you have more questions :)

-TraderMDJ