How to follow up the monthly line breaking through the previous high + weekly moving average adhesion + daily volume limit?

A monthly breakout above the prior high, combined with weekly MA adhesion and high-volume confirmation, signals a strong, institutionally-backed bullish trend in crypto markets.

Jul 29, 2025 at 11:42 am

Understanding the Monthly Line Breaking the Previous High

When the monthly line breaks through the previous high, it signals a powerful shift in long-term market sentiment. This event is considered a strong bullish confirmation in technical analysis, especially within the cryptocurrency market, where price volatility can amplify trend strength. The monthly chart provides the broadest time frame for assessing trend direction. A breakout above the prior monthly high suggests that accumulation has been completed and institutional or whale-level buying may be entering the market.

To identify this breakout, traders must first locate the highest price point of the previous monthly candle. Once the current monthly candle closes above that level, the breakout is confirmed. It’s crucial to wait for the monthly close to avoid false signals caused by intra-month volatility. For example, if Bitcoin reached $70,000 in a prior month and the current month closes at $72,000, this constitutes a confirmed monthly breakout.

This breakout becomes more meaningful when combined with other technical confluences such as moving averages and volume behavior. Traders should monitor the on-chain data and exchange inflows/outflows during this phase to validate whether the breakout is supported by real demand rather than speculative pump activity.

Interpreting Weekly Moving Average Adhesion

Weekly moving average adhesion refers to a scenario where multiple key moving averages converge closely on the weekly chart, forming a "tangle" or "cluster" around the current price. Common moving averages used include the 20-week, 50-week, and 200-week MA. When these lines are tightly grouped and the price is hovering near or above them, it indicates a period of equilibrium where the market is deciding its next directional move.

To analyze this, plot the 20-week MA (EMA or SMA), 50-week MA, and 200-week MA on the weekly chart of your chosen cryptocurrency. When these lines are within a narrow price range — say, less than 5% apart — and the price is interacting with this cluster, it's known as adhesion. If the price begins to rise above this cluster with momentum, it often marks the beginning of a new bull phase.

The significance increases when this adhesion occurs simultaneously with a monthly breakout. It suggests that short, medium, and long-term averages are aligning to support upward momentum. Traders should watch for a "clean" break above the MA cluster with strong weekly closing prices. Candlestick patterns like bullish engulfing or hammer formations near this zone can further confirm strength.

Confirming with Daily Volume Limit Expansion

A daily volume limit expansion — often referred to as a volume surge — is critical in validating the authenticity of a breakout. In cryptocurrency trading, volume reflects the intensity of market participation. When a monthly high is broken and weekly MAs show adhesion, a spike in daily trading volume confirms that the move is backed by real capital.

To monitor this, examine the daily volume bars on your charting platform (such as TradingView or CoinGecko). Look for days where volume exceeds the 20-day average by at least 1.5x to 2x. For instance, if Bitcoin’s average daily volume is $20 billion, a day with $35–40 billion in volume during the breakout week adds strong credibility.

Volume spikes should coincide with large green candles on the daily chart. Avoid breakouts that occur on low volume, as these are prone to failure or fakeouts. Use volume profile tools to identify volume nodes — areas where the most trading activity occurred. If the breakout clears a high-volume node, it indicates strong resistance has been overcome.

Additionally, check on-chain volume metrics from platforms like Glassnode or CryptoQuant. Metrics such as "Exchange Netflow" or "Large Transfer Volume" can show whether the volume surge is driven by retail buying, institutional movement, or exchange redistribution.

Step-by-Step Strategy to Trade the Confluence

• Open a charting platform and load the monthly, weekly, and daily timeframes for the cryptocurrency you're analyzing.
• On the monthly chart, identify the highest close of the previous candle and wait for the current candle to close above it.
• Switch to the weekly chart and apply the 20-week, 50-week, and 200-week moving averages. Confirm they are within a tight range (adhesion).
• Ensure the price is trading above or breaking above this MA cluster on the weekly close.
• Move to the daily chart and look for a recent daily candle with abnormally high volume, preferably 1.5x the 20-day average.
• Check that the high-volume candle aligns with the timeframe of the monthly breakout and weekly MA clearance.
• Use order book depth and funding rates (on futures markets) to assess whether the move is sustainable or over-leveraged.
• Place a limit buy order slightly above the daily breakout candle’s high to avoid slippage during volatility.
• Set a stop-loss below the weekly MA cluster or the monthly breakout level, depending on risk tolerance.
• Monitor open interest and whale wallet movements for early signs of reversal or continuation.

This strategy avoids chasing pumps and focuses on high-probability setups backed by multiple time frame confirmations.

Using Indicators to Strengthen the Signal

Beyond price and volume, several indicators can validate this multi-layered signal. The Relative Strength Index (RSI) on the weekly chart should ideally be rising from neutral (50) or oversold (<30) territory, avoiding overbought (>70) extremes unless in a strong parabolic phase.

The MACD (Moving Average Convergence Divergence) on the weekly chart should show a bullish crossover, with the histogram expanding above the zero line. This confirms momentum is aligning with the price breakout.

On-chain tools like the Network Value to Transactions (NVT) ratio or MVRV (Market Value to Realized Value) can provide macro confirmation. A declining NVT suggests the network is becoming more efficient relative to its transaction volume, supporting a bullish case.

For altcoins, compare the BTC dominance chart. If BTC dominance is falling while your asset is breaking out, it may indicate a broader altcoin season is beginning, increasing the likelihood of sustained momentum.

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Frequently Asked Questions

What if the monthly breakout happens but volume remains low?

A monthly breakout on low volume is considered suspect. It may indicate a lack of broad market participation. Such breakouts often fail or retest the breakout level. Wait for volume confirmation in the following weeks before considering entry.

How do I identify moving average adhesion on TradingView?

Add the 20, 50, and 200-period simple moving averages to the weekly chart. Zoom in to see if the lines are clustered within a narrow price band. Use the "Auto" or "Candle" scaling to ensure accurate visual alignment.

Can this strategy be applied to altcoins?

Yes, but with caution. Altcoins often lack consistent volume and may experience manipulated breakouts. Always cross-check with BTC correlation and on-chain activity. Focus on large-cap altcoins with transparent trading data.

What time of day should I monitor for daily volume spikes?

Cryptocurrency markets operate 24/7, but volume often spikes during UTC 00:00–04:00 (Asian and European overlap) and UTC 13:00–17:00 (U.S. market hours). Monitor these windows closely during breakout periods.