Short Term Update: Flat mode or Trend mode?

I always tell you guys that it is very important to evaluate the relationship between trend strength and volatility, it makes us understand if the market is in “trend mode” or “flat mode”, at the moment we are at the limits, the market has reacted from the support shown in the last update but it is not enough.
In order to stay in “trend mode” it is now necessary to make a higher top than the previous one, perhaps around $46,000; any top lower then this would imply that BTCUSD is slowing down and going FLAT.

BTCUSD Daily Chart – Kama deviation bands and efficiency ratio on lower pane

When a security or an asset is in “trend mode” it is strategically optimal to keep the position in the direction of the trend without trying to go against by opening a short positions inside the deviation bands resistance area.
If you really want to go short, enhance the efficiency of your initial stop-loss by pairing it with a trailing stop loss.

6 thoughts on “Short Term Update: Flat mode or Trend mode?

  1. Callisto

    Thank you for the update.
    I was wondering if you have a script/indicator in tradingview for your KAMA bands and efficiency ratio? I looked it up there, but could not find it. Thank you.

      1. Callisto

        Thank you very much for sharing! So great to be able to plot it myself and study from it.
        I am curious about kama efficiency ratio though. I just plotted it and it seems like “red” line gives a more pessimistic picture than the “blue” one. When blue is above 0.3 and red is already below 0.3, what conclusion would you make out of it?
        Thanks again.

      2. Hi,
        Due to the strong drop of last January 11 the red line is lower, remember that higher volatility tends to lower the kama efficiency ratio and since the red line uses the Low of each bar this is why it is lower than the blue line.
        I generally consider a market FLAT when both lines are <0.30

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