LTC vs. BTC OBV Comparison
Hey Fellow Speculators,
I wanted to discuss something I found that was quite interesting and could give us some insight as to future price.
This will mostly focus just on the OBV indicator. As described by Investopedia, "On-balance volume (OBV), a momentum indicator that measures positive and negative volume flow, was developed by Joseph Granville and introduced in 1963 to the technical community inside the pages of his book, "Granville's New Key to Stock Market Profits."
Granville felt that volume was the driving force behind the markets, and designed OBV to project when major moves in the markets would occur. In his book, he described the increase or decrease of his indicator, setting new highs or lows, as "a spring being wound tightly."
Let's take a look at price and the OBV indicator on the Monthly Timeframe:
Notice that we are forming a higher range on the OBV indicator while price is still below all-time highs. According to the developer of the indicator, "The theory posits that when volume increases or decreases dramatically, without significant change in an issue's price, at some point the price "springs" upward or downward."
So on the LTC/USD chart, it looks like the OBV indicator has broken up significantly on this timeframe and is once again trying to break out to the upside, so if this theory is correct we should get that dramatic repricing or "spring" upwards as price catches up with volume.
This chart looks silly but it aligns with our view from the "Why Litecoin" article and how dramatic repricing of this network can occur when BTC transfer fees rise. See that article for a more detailed explanation on the idea.
And now for comparison let's look at the BTC price and OBV indicator on the Monthly Timeframe for Comparison:
We have not broken the highs we made in December 2017 when price peaked at 20k. It looks like we're forming a symmetrical trinagle on the indicator and since momentum is upwards, I would also expect this to break out to the upside soon as we're approaching the apex of that triangle.
I found another interesting similarity between the ETH OBV chart and the LTC OBV chart from above. Check it out:
I'll repost the LTC OBV chart below for easier reference:
Notice that on the monthly timeframe on ETH that we were making higher highs on the OBV while price was consolidating sideways. Then we eventually got a large breakout to the upside in the price of eth soon after making that higher high on the OBV around the $350 level which culminated in a 1,000%+ move.
Are we soon to see an explosion in LTC price to the upside? Will it play out similarly to the ETH breakout? Let me know what you think!
Thanks for reading!