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. Analysis of the short-term trend
5. Japanese Candle Analysis
6. Conclusions
7. Statistics
1. Analysis of bitcoin futures volumes from the Chicago Futures Exchange (CME)
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 volume levels indicates an upward trend. Moving the maximum volume level down indicates a downward trend. The chaotic movement of the maximum volume levels indicates a flat in the market.
02/04/21 - Maximum Horizontal Volume Level (ROS-Point Of Control) - 37890
02/05/21 - Maximum horizontal volume Level (ROS-Point Of Control) - 38465
The ROS has moved up, the price is above the ROS level. The upward movement continues, so you should buy.
2. Analysis of the long-term trend
Trend is a trader's friend. Many traders know this saying, but they don't know how to use it. The answer is simple: trade only in the direction of the trend. This way your trades will have a greater profit potential with less risk. According to the Classical Dow theory, there are three main trends:
- the long-term
- the medium-term
- the short-term
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 time frame and will be 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 closes above the EMA (48), it means that we are facing an upward trend and should buy. If the daily candle closes below the EMA (48), it means that the trend is down and you 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.
The price is confidently holding 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. Analysis of the short-term trend
The short-term trend, which can show well 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), it means that the trend is upward and you should buy. If the H1 candle will close below the EMA (48), it means that the trend is downward and should be sold.
The price rose above the EMA (48). Short-term uptrend, Long-term, medium-term and short-term trends coincide, 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 down, the candle is black. The minimum is lower than the minimum of the previous candle. The shape of the candle is a hammer, with a long lower shadow. An upward movement is most likely, but the strength of the bulls is weakening.
6. Conclusions
Volume analysis: the ROS has moved up, the reaction to the ROS is BUY.
Long-term trend: up - BUY
Medium-term trend: up - BUY
Short-term trend: up - BUY
Japanese Candlestick Analysis - BUY
General conclusion: 08.02.21 - it is preferable to buy
7. Statistics
The statistics on completed transactions will be kept to analyze the effectiveness of this approach. The trade from 02/02/21 closed on the stop loss, which moved behind the daily lows. The result of this transaction is + 0.7%. Today we opened a new deal:
02/08/21 Bitcoin BUY: 39248; SL: 36902; Risk per transaction: 1% of the deposit. With a deposit of $ 10,000, the lot is 0.04.
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. Since trading is conducted on daily charts, this recommendation is relevant throughout the day.
Trade on the trend, and you will have good profit!
