1. How to make money on cryptocurrencies?
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME).
3. Trend analysis
4. Japanese candlestick analysis
5. Conclusion. Statistics
1. How to make money on cryptocurrencies?
In order to reap profits in the crypto market, it is important to understand who is driving it. The bitcoin market is quite big. Large market participants, companies, hedge funds play the key role here. Therefore, a successful strategy for a private trader is to follow market participants:
You should understand what a large player is doing and follow suit.
How can you understand the actions of major players? Try to imagine yourself in their place. Large players manage large amounts of cryptocurrency. In this regard, certain difficulties arise:
- you cannot immediately trade large volumes since the price can reverse direction. A large volume can affect the current price.
- Sufficient liquidity is needed. If a large player wants to buy a lot of bitcoins at a certain price, someone must be willing to sell them at that price. At the same time, the player may not find the amount of BTC he/she wants to buy at a certain price in the market. Bears will be ready to sell new volumes only at higher prices, which may not be suitable for the player.
- actions of major players become clearly visible. Once actions of large players become easy to understand, other market participants can try to direct the price against them so that they can make money on losses of major players.
What will a major player do in order to accumulate a sufficient position and not face problems at the same time:
- a price corridor is needed. A large player wants to buy at the best price. The most profitable price is the one that is neither rising nor falling. Therefore, a major player can try to keep the price in a channel until a needed position is accumulated.
- presence of small and medium traders. In order to attract private traders to the market, large market players can create false movements in different directions while the price is in the corridor. This explains false breakouts that regularly occur in the market. Therefore, it is important for traders not to fall for these tricks.
- time. You can't buy or sell a large position quickly. Therefore, market players are forced to work in large time frames. It can take days and even weeks to accumulate a position.
What conclusion can a private trader draw from understanding the logic of large players? They should learn how to trade based on large time frames, for example, D1. Large players often tarde using this time frame. Also, trading on the daily time frame does not take much time and can be combined with your other job or business. When it turns out to be profitable to trade on the daily time frame, you can switch to lower time intervals.
More options that can lead to profitable trading will be discussed in other daily reviews. Stay tuned.
Now, let's analyze the current bitcoin market and try to understand the actions of the major players.
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME)
Yesterday, BTC failed to reach a new high. The market entered a correction after the FOMC meeting. At the same time, the token is unlikely to plunge. It looks like there is another accumulation, a correction before another rally.
As a reminder, the level of the highest horizontal volume and its movement show where major market participants buy or sell bitcoin. It can help us predict the price movement for today:
17.03.21 – the level of the highest horizontal volume (POC – PointOfControl) – 54,975
18.03.21 – the level of the highest horizontal volume (POC – PointOfControl) – 58,560
The price is below the POC. It is moving within a corridor. Therefore, you can buy and sell BTC in a short term.
3. Trend analysis
If you want to follow large players' footsteps, you should trade with a trend since large market participants form them. Let's analyze the long-term, mid-term, and short-term trend. To do so, we use an exponential moving average (EMA):
Long-term trend – a blue EMA (1152 ) on the H1 chart, which is an alternative to EMA (48) on D1;
Mid-term trend – a red EMA (288) on the H1 chart, which is an alternative to EMA (48) on H4;
Short-term trend – a black EMA (48) on the H1 chart.
The price is above the three EMAs. We have an upward long-term, mid-term, and short-term trend. However, the short-term trend is less pronounced, the price is near EMA (48).
4. Japanese candlestick analysis
Japanese candlestick analysis is a time-tested method of market analysis. Use it in your trading and you will better understand the psychology of market participants. It should be carried out on the daily chart. Let's analyze yesterday's daily candlestick:
We have a black downward daily candlestick. It indicates the strength of bears. The current high is above the high of the previous candlestick. Bulls managed to reach a new high. It is a Hammer candlestick pattern, heading down. It has a small body and large shadows. The lower shadow of the Hammer is also large, which indicates that confrontation of bulls with bears. In such a case, a corridor movement is highly likely as well as both bulls and bears are equally strong.
5. Conclusion. Statistics
Volume analysis – BUY/SELL.
Long-term trend – BUY.
Medium-term trend – BUY.
Short-term trend – BUY.
Japanese candlestick analysis – BUY/SELL.
Conclusion: You can sell and buy BTC in a short term on March 19, 2021.
Trades and analysis are carried out in four instruments: Bitcoin, Ethereum, Litecoin, and BCHUSD. Trading account monitoring:
Gains for two months of 2021: +12.21%.
Statement:
Current deals:
18.03.21 Bitcoin BUY: 58066 SL: 53800; Risk per deal: 1% of a $10,000 deposit with 0,02 lot.
09.03.21 Ethereum BUY: 1831 SL: 1619; Risk per deal: 1% of a $10,000 deposit with 0,48 lot.
A 1% risk will protect you from excessive worries, but will allow you to earn tangible profit at the end of the year. A Stop Loss is placed beyond the high/low of the day, depending on the direction of the trade. We do not set a Take Profit and move a Stop Loss above the extreme points of the upcoming sessions.
Since trading is carried out on daily charts, this recommendation is relevant throughout the day.
Trade with the trend and you will generate profits!
