1.Analysis of bitcoin futures volumes from the Chicago Futures Exchange (CME)
2. Analysis of the long-term trend
3. Analysis of the medium-term trend
4. Short-term trend analysis
5. Japanese Candle Analysis
6. Conclusions
7. Statistics
1.Analysis of bitcoin futures volumes from the Chicago Futures Exchange (CME)
Since bitcoin is the flagship of the cryptocurrency market, we will first analyze its movement. The analysis uses data on horizontal volumes from the Chicago Futures Exchange on daily charts. The analysis is based on the Footprint Profile Theory, in which the movement of the maximum volume level for the day can indicate the likely direction of the trend. The maximum volume level is the level at which the maximum number of transactions was made, that is, the level of a large player. Accordingly, the upward movement of the maximum level indicates an upward trend. The moving of the maximum volume level down indicates a downward trend. The chaotic movement of the maximum volume levels indicates a flat in the market.
02/02/21 - Maximum Horizontal Volume Level (ROS-Point Of Control) - 34580
02/03/21 - Maximum Horizontal Volume Level (ROS-Point Of Control) - 36990
The ROS moved up, the price reaction after the infusion of this volume went up. There is a possibility that the upward movement will continue.
2. Analysis of the long-term trend.
A trend is a trader's friend. Many traders know this saying, but do not know how to use it. The answer is simple: trade only in the direction of the trend. This way your trades will have more profit potential with less risk. According to the Classical Dow Theory, there are three main trends:
All these trends are needed to be analyzed before opening any transaction. We will do this in this analysis.
The long-term trend in this analysis is the daily trend. Trades will be made on a daily timeframe and held for several days. The daily trend is analyzed using the EMA (48), an exponential moving average with a period of 48. If the daily candle will close above the EMA (48), then we have an upward trend and we should buy. If the daily candle will close below the EMA (48), it means that the trend is down and we should sell.
The chart clearly shows an upward trend. The price is higher than the EMA (48), so in this situation, you should only consider purchases.
3. Analysis of the medium-term trend.
In this analysis, the medium-term trend will be the trend on the 4-hour chart (H4). The EMA (48), an exponential moving average with a period of 48 will also be used for the analysis. If the H4 candle will close above the EMA (48), it means that the trend is upward and you should buy. If the H4 candle will close below the EMA (48), it means that the trend is downward and should be sold.
Strong uptrend, the price is above the EMA (48). This means that the medium-term trend is upward and coincides with the long-term trend, so you should buy.
4. Short-term trend analysis.
The short-term trend, which can show the entry point to the market will be considered a trend on the H1 timeframe. The EMA (48), an exponential moving average with a period of 48 will help us. If the H1 candle will close above the EMA (48), then the trend is upward and you should buy. If the H1 candle will close below the EMA (48), then the trend is downward and you should sell.
The price is above the EMA (48), an uptrend. Strong uptrend; long-term; medium-term and short-term trends are the same, you should buy.
5. Japanese Candle Analysis.
The classic Japanese Candlestick Analysis is used for the daily timeframe. In this analysis, we will also analyze the daily candle.
Closing the daily candle up, the candle is white. The high is higher than the high of the previous candle indicating an upward movement. The shape of the candle is trending with a large body and small shadows. It's probably an upward movement, so you should buy.
6. Conclusions.
Volume Analysis: the ROS moved up, the price reaction is up - BUY.
Long-term trend: up - BUY.
Medium-term trend: up - BUY.
Short-term trend: up - BUY.
Japanese Candlestick Analysis - BUY.
General conclusion: 02/04/.21 - it is preferable to buy.
7. Statistics.
It is necessary to keep statistics on completed transactions to analyze the effectiveness of this approach. We continue to be engaged in this transaction:
02/02/21 Ethereum BUY: 1441; SL: 1494; Risk per transaction: 1% of the deposit. The stop loss was moved for the minimum of the day 02/03/21. This transaction is already at breakeven and a small profit is recorded.
The stop loss is located behind the daily extreme. We do not set a take profit, as we will accompany the transaction by moving the stop loss beyond the extremes of the new days. This recommendation is relevant throughout the day since trading is conducted on a daily chart.
Keep it simple and trade on the trend, you will have good profit!
