Momentum and Top & Bottom structures

Momentum

The "explain like I'm 5" version of being able to visually tell momentum is

• ●Watching price flatten its slope
• ●Decreasing volume

Example

• ●You see that LUNA has a sharp sell-off (high momentum)
• ●It then starts to "flatten out" in the low 60's
• ●Volume drying up hinting that market participants (seller dominant PA) is starting to slow down

Gives you a sign that price is

1. 1Ready for a bottom
2. 2Allows you to position for a reversal
3. 3Exit your shorts

There are multitudes of ways, you can use MAs to gauge momentum as well.

There are obviously mean reversion strategies, Bollinger bands and even stoch.

A simple visual test works as well, and it depends what your strategy is. You can incorporate various techniques but just know that you're trying to make a robust strategy, not one that only works when lightning strikes.

GENERAL BREAKDOWN OF MOMENTUM AND TOP/BOTTOM MARKET STRUCTURES

As always, this isn't a "fool proof" 100% guarantee setup but if you're in the market often, you'll notice that these formations happen on all timeframes.

You can invert this little cheat sheet for bottoms as they're essentially two sides of the same coin.

Key things to note

1. 1Clean trend
2. 2Price begins to fully retrace pushes up
3. 3Price struggles to maintain expansion highs (more sellers and sellers acting "faster")

Between 1. and 2., there's a key change in PA. Price had not been quickly retracing pumps and did not struggle to maintain highs. In fact, prices just.. went up and consolidated before going up more.

Small changes in PA that often go unnoticed tend to be the market tipping its hand as to where price "wants" to go.

I use "want" and not "will" because there's usually never a 100% chance that prices will do anything. You're simply taking any visual cues that you get to make as best of a decision as possible.

Market Structure is key here as we highlight both the LOWS that led to the expansion. Losing those lows typically does not bode well.