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 displacement of the maximum amount of levels up 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.
10.02.21 – maximum horizontal volume level (POC - point of control) – 45445
11.02.21 – maximum horizontal volume level (POC - point of control) – 48500
The POC has moved up, the price is below the POC level. The market is in a sideways correction, you can both buy and sell.
2. Analysis of the long-term trend.
A trend is a trader's 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. According to the classical Dow theory, there are three main trends:
- long-term;
- medium-term;
- short-term.
It is all these trends that need to be analyzed before opening any transaction. In this analysis, we will do this.
The long-term trend in this analysis is the daily trend. Trades will be made on a daily timeframe 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 closed below the EMA (48), it means that the trend is downward and should be sold.
The chart clearly shows an upward trend, the price is higher than the EMA (48), so in this situation, it is worth considering 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 closed above the EMA (48), it means that the trend is upward and you should buy. If the H4 candle closed below the EMA (48), it means that the trend is downward and should be sold.
The price stays 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. Short-term trend analysis.
The short-term trend, which can well show 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 closed above the EMA (48), it means that the trend is upward and you should buy. If the H1 candle closed below the EMA (48), it means that the trend is downward and should be sold.
The price is higher than the EMA (48). The short-term trend is upward. Long-term, medium-term, and short-term trends are the same, so 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 up, the candle is white. The maximum is higher than the maximum of the previous candle. The shape of the candle is indeterminate, the body inside the body of the previous candle, long shadows.
6. Conclusions.
- Volume analysis: the POC moved up, the reaction to the POC - buy sell.
- Long-term trend: up - buy.
- Medium-term trend: up - buy.
- Short-term trend: up - buy.
- Japanese candlestick analysis - buy sell.
- General conclusion: 12.02.21 – you can both buy and sell.
7. Statistics.
To analyze the effectiveness of this approach, statistics on completed transactions are kept. Forecasts are made and transactions are made on four instruments: Bitcoin, Ethereum, Litecoin, BCHUSD.
The result for February 2021 is +3%.
We do not open a new deal, there is no certainty in the market.
For new trades, 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.
