Hello everyone!

Welcome to the eighteens edition of my newsletter! Every Saturday I’ll be sending out a quick newsletter on how to master crypto.

Today, I focus on tops and bottoms.

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Why learning about tops and bottoms?

If I had known earlier what constitutes a top or bottom, I would have made more profits, and most importantly, I would have made less losses.

Those who can wait for a bottom signal don't catch a falling knife, but rather short that thing all the way down.

One thing is clear: The profits of your investments are at their highest when you buy at the bottom and sell at the top. Fact.

Even though this is never achieved 100% in practice, tops and bottoms still show similar characteristics.

Volume

Speaking about tops and bottoms is also a lesson about Volume. Let’s first have a look at the dramatic reversals, the reversal days.

The clear sign of a reversal day is a huge Volume spike. This also applies sometimes to tops, but it's especially common with bottoms. A dramatic selloff - capitulation - and the bottom is in.

I’m sure you remember this bottom:

The opposite would be a blow-off top. Can you remember how the entire Crypto Twitter expected a blow-off top after the ATH? Almost everybody was calling 100k and a blow-off top.

Blow-off top, blow-off top! Didn’t happen.

Here at Google, you can see a blow-off top with the corresponding volume spike. With Bitcoin, it stayed as a rounded top back then, almost exactly at the same time (Nov 2021) and in the same manner as marked in white on this chart of Google.

At Bitcoin’s ATH there is no spike in Volume. There was no reversal day, no blow-off top.

But take a closer look at the volume over a longer period; it's drying up. This is a dying trend. No spike, no big bang, the trend fades away and flips over.

Here with Solana, I've added other indicators as well. You can see bearish divergences all over.

Strong uptrend in the beginning, Volume and indicators are rising. However, the next higher high of price is a lower high on all indicators, and volume is dying.

Caution!

I also speculated on a blowoff top back then. I think most people were so caught up in the excitement that the desire to have one last top was stronger than paying attention to the chart.

TA > FOMO. Read that again.

Wicks

Let’s talk about another important topic related to tops and bottoms: wicks.

The appearance of many wicks without significant price movement is a clear sign that market makers are establishing their positions. When there are wicks downwards, long positions are being built, and vice versa.

When you combine that with the intense volume and the strong resistance, one could definitely have anticipated the second uptrend in 2021.

Candlestick patterns

One last topic that I would like to touch upon is candlestick patterns. They are interesting for every timeframe and belong to the absolute standard knowledge!

Some time ago, I wrote a thread on this topic that I highly recommend to you, as there are several reversal patterns that you should definitely be familiar with!

If you want to delve deeper into the topic, take a look at more reversal chart patterns that we haven't covered today (just google it):

• Double Bottom / Top

• Tripple Bottom / Top

• (Inverse) Head and Shoulders Reversal Pattern

Twitter Reads

A little bit of celebration 🫶

In this sense, shut up and learn. Then do it and wait. With my best regards and wishes, I hope you have a wonderful weekend.

Marco

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And if you have any questions, I’d happy to help. Just reach out to me on Twitter.

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