1. Analysis of Bitcoin volume on Chicago Mercantile Exchange
2. Analysis of long-term trend
3. Analysis of medium-term trend
4. Analysis of short-term trend
5. Japanese candlestick analysis
6. Conclusions
7. Statistics
1. Analysis of Bitcoin volume on Chicago Mercantile Exchange (CME)
The analysis is based on the horizontal volumes data on daily charts on the Chicago Mercantile Exchange. The analysis is carried out based on the footprint-profile theory. According to the theory, the direction of the level with the highest trade volume within a day can indicate the likely direction of the trend. The highest trade volume is the level with the largest number of transactions carried out. That is, it is the level of major market players. Accordingly, if the highest trade volume level goes up, it indicates an upward trend. Otherwise, if the highest trade volume level goes down, it indicates a downward trend. Chaotic movements signal that the market is trading flat.
02.03.21 – The level of the maximum traded volume (POC – PointOfControl) – 48,045
03.03.21 – The level of the maximum traded volume (POC – PointOfControl) – 51,690
The POC has moved up. The price is below the POC level. The upward trend seems to have started. Thus, you can open long positions.
2. Analysis of long-term trend
A trend is the trader's friend. Many traders know this saying but do not know how to use it. The answer is simple: to trade only in the direction of a trend. Thus, your trades will have more profit potential with less risk. According to the classic Dow theory, there are three main trends:
long-term
medium-term
short-term
These are the trends you should analyze before entering the market. This is what we are going to do in the analysis below.
The long-term trend is the daily trend. In this case, deals are made in the daily time frame and are held for several days. The analysis of the daily trend is made with the help of the 48-period exponential moving average (EMA). If the daily candlestick closes above EMA(48), it will indicate the upward trend. Therefore, you should enter long. If the daily candlestick closes below EMA(48), then it is the downward trend and you should enter short.
The price is above EMA (48). The chart indicates an upward trend. Therefore, you should consider opening long positions.
3. Analysis of medium-term trend
The medium-term trend is the trend on the 4-hour chart (H4). In this case, we will also turn to EMA(48). If the candlestick closes above EMA(48) on the 4-hour chart, it will indicate the upward trend. Thus, you should enter long. Otherwise, if the candlestick closes below EMA(48) on the H4 chart, it will indicate the downward trend. Consequently, you should enter short.
The price is in line with EMA (48). It is the medium-term sideways trend. This means you can both buy and selll the token.
4. Analysis of short-term trend
A short-term trend is the trend in the H1 time frame. Moreover, it can show an entry point into the market well. We will turn to EMA(48) again. If the candlestick closes above EMA(48) on the H1 chart, it will indicate the upward trend. Thus, you should enter long. Alternatively, if the candlestick closes below EMA(48), it will indicate the downward trend. Consequently, you should enter short.
The price is in line with EMA(48). It is the short-term sideways trend. Thus, you can both sell and buy the instrument. The long-term, the medium-term, and the short-term trend do not coincide.
5. Japanese candlestick analysis
A classic Japanese candlestick analysis is applied to the daily timeframe. In this particular analysis, we will also look at the daily candlestick.
Thus, we have a white upward daily candlestick. Its high is above the high of the previous candlestick. The candlestick has a large body. The upward movement is highly likely.
6. Conclusion
Volume analysis – BUYLong-term trend – BUY Medium-term trend – BUY/SELShort-term trend – BUY/SELLJapanese candlestick analysis – BUYConclusion: On March 4, 2021, you can open both sell and buy deals.
7. Statistics
To analyze how effective this approach is, the data on completed transactions is tracked. The forecast is made for four instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. Trading account monitoring:
February 2021 gain: +10.93%.
Statement:
Current deals:
02.03.21 Bitcoin BUY: 49,249.81 SL: 44,455; Risk per deal: 1% from a $10,000 deposit with a trading volume of 0.2 lot.
Stop-loss orders for new trades can be placed beyond the daily extreme point. We do not set Take-profit orders, as we will continue to move SL beyond the extreme points of the future sessions.
Since trading is carried out on the daily charts, this recommendation remains relevant throughout the day.
Trade with the trend and you will make a profit!