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How can one determine when a correction is likely to occur? We need more technical facts to build a case.  Candlestick reversal patterns are another aspect we can use.  When reversals occur, typically there is a telling formation with the candlesticks that acts as confirmation. 

By painstakingly hand coding a list of these candlestick reversal patterns, I’ve added a secondary confirmation when we see encroachment on a Bollinger band combined with a candlestick pattern. 

This can be used to predict corrections, or portend momentary dips in a trending market to add to enter a position or add to one.


The Momentum Indicators

 
The three momentum indicators are:
  1. Kovach Momentum – measures very short term momentum ‘spikes’
  2. Kovach Chande – measures mid term momentum
  3. Kovach OBV – measures long term momentum
Using a combination of the above, a user can ascertain the overall trend (using the long term momentum), and the retracement (using the shorter term momentum).  This is highly valuable to identify optimal entry points.  One never wishes to buy at highs, for example.  Optimally, one would wait for momentum to recede, and the price to pullback to enter a trade.
 
These indicators can overlay on top of a chart, or (preferably) reside in their own window below the main chart window.

The Reversals Indicator

 
Finally, the reversals indicator, Kovach Reversals, consists of two key concepts:
  1. Bollinger Bands
  2. Candlestick Reversals
Bollinger bands measure volatility by calculating the standard deviation.  Based on statistics, one can anticipate corrections to the down side when the price encroaches on the upper Bollinger Band, and corrections to the upside when the price encroaches on the lower Bollinger Band.  This is not the case in strongly trending markets.

Quantguy Crypto Indicators

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Kovach Altcoin Index

 

This index is a weighted average of the top 5 altcoins by market capitalization.

Since this changes often, the index is updated weekly. You can think of it as the S&P 500, but for altcoins.

Itʼs extremely useful to get & feel for the flow of funds between bitcoin and the other altcoins.

Kovach Altcoin Index

 

With the Kovach Crypto Spread, we c&n visu&lize the returns on Bitcoin vs the top altcoins by m&rket capitalization. Since the market capitalization changes frequently, this indic&tor is upd&ted weekly.

If the indicator is in positive, bitcoin is providing better returns than the altcoins.
If the indicator is negative, the converse is true.

Testimonials from Real Traders

These indicators helped a lot!

Ramsley

Your reversal candle indicator marked red on the hourly and now it’s coming down!  Golden, this thing!!!

Chris

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