1. Analysis of BCH/USD volume on Binance exchange.
2. Long-term trend analysis.
3. Medium-term trend analysis.
4. Short-term trend analysis.
5. Japanese candlestick analysis.
6. Conclusions.
7. Statistics.
1. Analysis of BCH/USD volume on the Binance exchange.
In this analysis, we will use the data on horizontal trading volume from the Binance exchange on daily charts. The analysis is carried out based on the footprint-profile theory. According to the theory, the direction of the horizontal level with the highest trade volume within a day can indicate the likely direction of the trend. The level with the highest traded volume is the level where the maximum number of transactions has been made. This is the level of a major market player. Thus, if the maximum volume level moves higher, this indicates an uptrend. A downward movement of this level indicates a downtrend. A chaotic movement signals that the market is trading in a sideways trend.
20.02.21 – The level of the maximum traded volume (POC - Point Of Control) – 740
21.02.21 - The level of the maximum traded volume (POC - Point Of Control) – 720
The POC has moved down. The price is below the POC level. The market seems to start moving sideways, so you can open both short and long positions.
2. Long-term trend analysis.
A trend is your 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. The classic Dow Theory describes three main trends:
long-term;
medium-term;
short-term.
You need to analyze these trends before opening any trade. This is what we are going to do in the analysis below.
A long-term trend is a trend on the daily chart. Trades will be opened on the daily time frame and held for several days. The analysis of the daily trend is carried out 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). In this situation, The price is holding above the EMA (48), so you can both buy and sell.
3. Medium-term trend analysis.
In our 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), then we have an uptrend and we should open buy positions. If the H4 candlestick closes below the EMA (48), then there is a downtrend and we should go short.
The price is located above the EMA (48). Therefore, you can open both short and long trades.
4. Short-term trend analysis.
In this analysis, the short-term trend is a trend on the H1 chart. It can show a point where we can enter the market. Here, we will again use the EMA (48) - an exponential moving average with a period of 48. If the candlestick closes above the EMA (48) on H1, this means that the quotes are trading upwards and we should buy. If the candlestick closes below the EMA (48) on H1, this indicates that the trend is downward and we should go short.
The price is below the EMA (48). The short-term trend is downward. The long-term, medium-term, and short-term trends do not coincide.
5. Japanese candlestick analysis.
The classic Japanese candlestick analysis is applied to the daily trading chart. In this analysis, we will also analyze the daily candlestick.
The daily candlestick closed upwards, the candlestick is white. Its low is located below the low of the previous candlestick. The candlestick pattern is a hammer with an upward movement. A sideways movement is likely as the price cannot break out of the range for several sessions in a row.
6. Conclusions.
1.Volume analysis: BUY SELL. 2.Long-term trend: BUY. 3.Medium-term trend: BUY SELL. 4.Short-term trend: SELL. 5.Japanese candlestick analysis – BUY SELL.Conclusion: On February 22, you can open both long and short positions.
7. Statistics.
To analyze the effectiveness of this approach, we will keep the data on completed transactions. We prepare forecasts and open our trades on four major instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. Please, check other articles regarding this topic. Trading account monitoring:
We gained +11.34% in February 2021
Trade: 03.02.21 BCHUSD BUY: 441.26; SL: 669, it was closed with stop trade with the gain of +6%. It is not recommended to open new deals as the situation is uncertain in the market.
When opening new positions, you should place Stop Loss beyond the daily extreme points. Do not place Take Profit as will continue to move 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.
Trade with the trend and you will make a profit!