This is a daily chart of Bitcoin from November 2021 to March 2022. This case study focuses on how prices move across important supply and demand areas using both the proven VWAP as well as the fixed volume by price tool on TrendSpider. Some of the important terms to be excluded from this case study are “volume gaps” and “cross-tie” areas.
BTC Daily Chart Case Study: Using Static VWAP with Offset and Volume by Price to Show Break-even Zones
- This figure shows the fulcrum of both volume in price and the installed VWAP tool. A “fulcrum” is a point on a chart where someone begins to measure a certain indicator. In this case, the VWAP is essentially measuring the average dollar cost since the November high in 2021. Volume by price is fixed at the same point that basically measures where volume has occurred since the reversal point in November 2021.
- This figure shows the VWAP associated with the different percentage offset at which the price respects a certain percentage. The orange line is the original VWAP installed from November 2021. The blue line is -1.5% offset from the original VWAP based on how the price declined in this range in early December 2021. The red line is 2.5% offset from the original November reversal point which was also a reversal point. The price is over a 5-month period from November 2021 to March 2022.
- This figure shows the “Volume Gap” which is an area shown using constant volume by price. This ‘gap’ is basically a liquidity gap where not much volume has occurred. This “Volume Gap” works similarly to price gaps as prices can move very quickly through this “Vacuum” in the market as you can see what happened in late March 2022.
- This figure shows an area just above the volume gap which is the next level where a lot of volume has happened since the November 2021 reversal. This “break-even” area is basically the volume that has held up on the pullback and is now back to breakeven. Once these market participants return to break-even, some will sell to reduce their exposure after dealing with a significant unrealized pullback. These areas generally act as resistance areas that can sometimes last a few days before the price moves higher or can be long-term reversal points.