Retail investors are greedy, time to correct! How important is long/short ratio (LSR) position!

KD indicator, wonderful performance may be coming!

2020/06/04 (Thursday)

Trade theory and my trading experience told me that KD indicator is important......  

6/2 Bitcoin (BTC) is correcting, the low even to $9300. Then, BTC establish the congestion area between $9400-9700, and the average volume of BTC (1D) is decreasing over time.


Investors should notice the price/volume trend and LSR (Long/Short Ratio) in this timing. If BTC price is able to break up the symmetrical triangle, the pattern target of the breakup from the triangle is $11800-11600 (blue dotted line in the picture). Conversely, bullish view will be invalidated if price breakdown the support level of symmetrical triangle ($9150-9200), and the pattern target is $8150-8200 (blue line in below picture).


On the other hand, trade theory and my trading experience told me that KD indicator (Stochastic Oscillator) is important, and there is still high probability for bulls to push the price above $10500, that is price breakout. Generally, the order of strong bulls attack (BTC price may up to new high) including 5 steps: 

1. KD indicator (1D) <30 more than 3 days, price keep falling down and retail investors are panic. Market makers do the upward crash, that is market makers wash the retail investors who with less confidence will sell out and leave the market.


2. KD 20 -> KD50. Market makers just completed the upward crash and price started to rise. At this time, most retail investors open the short position, that means the fuel of short-squeeze is enough. Hence, short squeeze will start in the short term.


3. KD 50 -> KD70-80, and KD>70 more than 3days.  Market makers carry out the strong short-squeeze (bullish), and price rise rapidly. The fuel of short-squeeze decreasing as price rising.


4. KD70-80 -> KD50. Market makers completed the short-squeeze and most retail investors start to open the long position. Therefore, the price correction will happen in the short term because the fuel of short-squeeze is not enough.  


5. KD50 -> KD70-80 again. Two line of KD indicator formed golden fork and KD up to 70-80 more than 3 days again (short-squeeze). Volume and price increase simultaneously, and most retail investors start to open the short position. At this moment, the real bull market is coming, time to appreciate the performance of market makers. ->maybe now!

By the way, remember to keep an eye on the position trends of retail investors. :D Good luck!



As an analyst, I think that I can't predict the direction of market, but I am ready for a strategy of bullish or bearish.

Yu-Shiuan Chen