Elliot Waves count combined with a good indicator are really powerful tools while trading.
For instance, I use mostly the RSI but also the so-called "Open Interest" which is a measure of the number of contracts of a trading pair in a particular timeframe, or, if you prefer, a number of "open positions".
Usually, an increase of the open interest accompanying the increase of the price is just confirming the UPTREND, but also an increase in open interest along with a decrease in price confirms a DOWNTREND.
Converserly, a Flat or declining open interest when the price is increasing or decreasing used to indicate a Reversal aka Divergence.
As a reminder, the following table helps a lot:
As an example, will se if It works later ;-) , on the YFI/USDT 4hour chart, YFI has had an excellent performance lately, rising 300% since November the 5th.
Yes, from 7000 USDT to 28000 USDT.
The problem always with this type of explosive rallies is that it used to be very difficult to predict a correction since the price keep rising without signals of weakness.
However, we have a nice divergence between the price and the open interest.
You see? it looks like, despite the rice keeps rising, the open interest is decreasing, meaning that open positions are being reduced... what does it mean? My reading is that LONGS are TAKING PROFITS, closing their positions and the new long positions are more and more scarce that may be an indication of reversal/correction.
So, here instead of adding longs my bet is for opening a short on YFI, will it work?
Additionally, do you remember my post about ADA a couple of days before?
I am keeping my long on it ;-), following the Open Interest.
Let's see tomorrow.
I'm sharing only my quick trading Ideas here, not financial advice at all ;-)
*Disclaimer: This is just my personal point of view, please, do your own assessment and act consequently. Neither this post nor myself is responsible of any of your profit/losses obtained as a result of this information.