Is VCP Applicable to LEO? A Trader’s Perspective

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IsVCP_ApplicableToLEO.png

Is VCP applicable to LEO?

What is VCP? VCP stands for Volatility Contraction Pattern. I learned this technical indicator sometime in 2016 after suffering a 98% annual loss in my 200,000 PHP portfolio in trading stocks in the Philippine Stock Exchange. The term was coined by Mark Minervini.

The idea in VCP is that after an initial bull run in a particular stock, it will soon be followed by a series of decreasing corrections. Let us say, for instance, that MEG increased 200% within a month. After that huge rally, it is expected that buyers will get exhausted and holders will start to take profit. As an outcome of such sentiment, it is but natural to see a correction. Typically, you will see a shooting star at the end of such a rally.

ShootingStar.png

Source

The appearance of a shooting star after a prolonged rally is a bearish indicator. This is exactly what we see in LEO after a month of uptrend from 13 July to 13 August.

How about VCP? What role does it play in the ongoing rally of the LEO token?

Despite the massive correction that followed after a 1,140% price appreciation from 0.10 SWAP.HIVE to 1.24 SWAP.HIVE, I agree that the general sentiment about the token remains bullish and positive. Both the creation of SURGE and LSTR support this thesis.

The idea of VCP is that the percentage of correction will continue to decrease, let’s say from 30% to 20% and then to 10% down to 5% or less. Such a correction is usually associated with decreasing volume. Soon, the profit takers will get exhausted, and the bulls will overpower the sellers. With @leostrategy as a constant buyer of the LEO token, we are given the assurance that capital is available to support price stability that could potentially lead to the resumption of price appreciation.

Let us see how such a correction applies to LEO from 13 August to 01 September. So far, in the first chart above, we observe at least three major corrections. The first correction is from 1.24 on 13 August to 0.87 on 15 August. In just three days, LEO retraced 29.83%.

The second correction is from 1.04 down to 0.57. That’s from 16 to 22 August, when LEO retraced 45.19%. VCP appears inapplicable, for the percentage of the second correction is higher than the first.

How about the third correction? From 23 August to 29 August, LEO retraced from a high price of 0.60 SWAP.HIVE down to 0.45 SWAP.HIVE. That’s a 25% correction. That is still big. I am expecting either a consolidation or a 3% to 5% correction in the coming days. In this kind of game, only the patient and those who have a long-term mindset win.

How about volume? Is it shrinking? I don’t see such a reduction in volume. It remains relatively stable.

My conclusion is that, though VCP can be used as a guide to interpret the current direction in the price of LEO, the details of this technical indicator seem to evade the current sentiment in this impressive Hive Engine token.

As for me, I already sold 500 LEO when the price reached 1.10 SWAP.HIVE and sold another 500 LEO at 0.63 SWAP.HIVE. I used the profit I gained by buying 30 SURGE and 10 LSTR. The SURGE play has three distinct benefits: stability, passive income, and future speculation. I wrote about it two weeks ago.

My current stake is 3,000 LEO, while at the same time, I am still holding 1,000 liquid LEO. The first is for the long term, and the 1,000 LEO is for a speculative play and to secure the profit. With LEO’s current price of 0.50 SWAP.HIVE, I stopped selling. If LEO goes down below 0.40 SWAP.HIVE, I will be a buyer.

As mentioned above, I anticipate that in the coming days and weeks, a prolonged consolidation will follow. Such consolidation is healthy for the resumption of the bullish run.

Grace and peace!

Posted Using INLEO

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11 comments

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It's to be seen how ends the downvote issue with leo.voter and premium users and alpha

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Luckily, that has no impact on LEO’s success

The only impact it has is on real users who get their motivation for hive demoralized by seeing their content downvoted for no concrete reason. Hopefully BT wakes up to that before too many people leave

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(edited)

I am not aware of such an issue. What's the reason for the downvote?

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https://peakd.com/test/@niallon11/re-alpha-t1qsfl

That's the various points, make your own opinion of course

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“Vote buying for delegation”

I’m not a fan of Leo at all, quite opposite given its history of screwing people with things like Cub Finance in 2021 where it was obvious the APR promised was impossible without the item itself crashing and failing. All that said, I disagree with the targeted DV’s as it’s cherry picked and the whales pick & choose which ones to DV. Not that I’d support DV’s for any and all voting bots who vote based on delegation, such examples as ED or PIMP among many others, but it would be said to have a single policy and not pick & choose. I literally think Leo is scammy AF, but I’m not supporting DV’s for its users! !PIZZA !ALIVE

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Hive would be a better place without upvote for delegation tokens and services. That said, I do not support cherry picking of projects to DV. it’s not helpful at all. We can view the return proposal and make sure Leo doesn’t get a dime of community funding to fight it. DVing users when there’s 15 other delegation for upvote tribes of projects is not cool. I say this as the most anti Leo person around. !PIZZA !ALIVE

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here alpha isn't complaining about upvote for delegations but premium users paying and getting a guaranteed upvote, so vote buying is the declared reason

i agree with you tough

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When prices go up that much, there are definitely people selling there who have been waiting for a long time. After forming support, it will start going up again.

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Yes, the bullish sentiment is still strong.

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It plays no role in something like a tribe token with under a few hundred dollars of volume a day most likely. That said after a pump it’s almost certain it’s going to crash lower on something like a tribe token that’s lately manipulated. So maybe it does just based on what goes up just come down. Just seems to me overall something with such tiny volume is easily controlled so it can go either way. !PIZZA !ALIVE

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(edited)

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Interesting analysis and technical indicator.

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