1. Volume analysis of bitcoin on the Chicago Exchange.
2. Analysis of the long-term trend.
3. Analysis of the medium-term trend.
4. Analysis of the short-term trend
5. Japanese candlestick analysis.
6. Conclusion.
7. Statistics.
1. Volume analysis of bitcoin on the Chicago Mercantile Exchange.
In this analysis, we will use the data on the horizontal trading volumes from the Chicago Mercantile Exchange on the daily charts. The analysis is based on the footprint-profile theory. According to the theory, the direction of the level with the highest traded volume during the day indicates the possible direction of the trend. The level with the highest traded volume is the level where the maximum number of transactions was made. In other words, it is a level of major market players. Thus, if the maximum volume level moves higher, it points to an uptrend. At the same time, a downward movement of this level indicates a downtrend. A chaotic movement signals that the market is trading flat.
25.02.21 – The level of the maximum traded volume (POC – Point Of Control) – 52,770
26.02.21 – The level of the maximum traded volume (POC – Point Of Control) – 46,955
POC moved down and the price is above the POC level. The market entered the sideways correction. It is possible to open both sell and buy positions.
2. Analysis of the long-term trend.
A trend is your friend. Many traders know this expression but do not know how to apply it to life. The answer is simple: you should trade only in the direction of the trend. This way, your trades will have more profit potential with less risks. The classic Dow Theory describes three main trends:
long-term;
medium-term;
short-term.
You need to analyze these trends before you start trading. This is what we are going to do in the analysis below.
In this analysis, a long-term trend is a daily trend. Trades will be opened on the daily time frame and
will be held for several days. The analysis of the daily trend is performed with the help of the EMA(48), an exponential moving average with a period of 48. If the daily candlestick closes above the EMA (48), then we have an uptrend and we should open buy positions. If the daily candlestick closes below the EMA (48), then there is a downtrend and we should go short.
On the chart, we can see an uptrend. The price is above the EMA(48). That is why we recommend opening buy positions.
3. Analysis of the medium-term trend.
In this analysis, a medium-term trend will be the trend on the 4-hour chart (H4). EMA (48), an exponential moving average with a period of 48, will also be used for analysis. If the H4 candlestick closes above the EMA(48), the trend is upward and traders can open buy positions. If the H4 candlestick closes below the EMA(48), the trend is downward and traders should open sell positions.
The price is below the EMA(48). The mid-term trend is downward. Traders can open sell positions.
4. Analysis of the short-term trend.
A short-term trend that can also show an entry point into the market is considered a trend on the H1 time frame. In this analysis, we will again use the EMA(48), an exponential moving average with a period of 48. If the H1 candlestick closes above the EMA(48), there is an uptrend and traders should open buy positions. If the H1 candlestick closes below the EMA(48), the trend is downward and traders should open sell positions.
The price is above the EMA(48). The short-term trend is upwards. Traders can open buy positions. Long-term, mid-term, and short-term trends do not move in one direction.
5. Japanese candlestick analysis.
The classic Japanese candlestick analysis is applied to the daily time frame. In this analysis, we will also use the daily candlestick.
A daily candlestick closed lower. The candlestick is black. Its low is below the low of the previous candlestick. The candlestick pattern is an upward Hammer. An upward movement is possible.
6. Conclusion.
- Volume analysis – BUY SELL.
- Long-term trend – BUY.
- Medium-term trend – SELL.
- Short-term trend – BUY.
- Japanese candlestick analysis – BUY.
Conclusion: On March 1, 2021, it is recommended to open both buy and sell positions.
To analyze the effectiveness of this approach, we keep data on completed transactions. We prepare forecasts and open trades on four major instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. You can also read other articles. Data from the trading account:
In February 2021, the gain is +10.93%.
7. Statistics
Do not open new positions, as the market situation is uncertain. . For new positions, Stop Loss is placed beyond the daily extreme. Do not place Take Profit as we will monitor the trade, moving Stop Loss beyond the extreme points in the future sessions.
Since the trade is carried out on the daily charts, the recommendation remains relevant throughout the day.
Follow the trend and you will get profit!
