1. Volume analysis of ETHT/USD on the Binance Exchange.
2. Analysis of the long-term trend.
3. Analysis of the medium-term trend.
4. Analysis of the short-term trend
5. Japanese candlestick analysis.
6. Conclusion.
7. Statistics.
1. Volume analysis of ETHT/USD on the Binance Exchange.
In this analysis, we will use the data on the horizontal trading volumes from the Binance Exchange on the daily charts. The analysis is based on the footprint-profile theory. According to the theory, the direction of the level with the highest traded volume during the day indicates the possible direction of the trend. The level with the highest traded volume is the level where the maximum number of transactions was made. In other words, it is a level of major market players. Thus, if the maximum volume level moves higher, it points to an uptrend. At the same time, a downward movement of this level indicates a downtrend. A chaotic movement signals that the market is trading flat.
14.02.21 – The level of the maximum traded volume (POC – Point Of Control) – 1,834
15.02.21 – The level of the maximum traded volume (POC – Point Of Control) – 1,699
POC moved down and the price is above the POC level. The market entered the sideways correction. It possible to open both sell and buy positions.
2. Analysis of the long-term trend.
A trend is your friend. Many traders know this expression but do not know how to apply it to life. The answer is simple: you should trade only in the direction of the trend. This way, your trades will have more profit potential with less risks. The classic Dow Theory describes three main trends:
long-term;
medium-term;
short-term.
You need to analyze these trends before you start trading. This is what we are going to do in the analysis below.
In this analysis, a long-term trend is a daily trend. Trades will be opened on the daily time frame and
will be held for several days. The analysis of the daily trend is performed 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 the beginning of the uptrend. The price is above the EMA(48). That is why we recommend opening buy positions.
3. Analysis of the medium-term trend.
In this 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), the trend is upward and traders can open buy positions. If the H4 candlestick closes below the EMA(48), the trend is downward and traders should open sell positions.
The price is above the EMA(48). The trend is upward. Traders can open buy positions.
4. Analysis of the short-term trend.
A short-term trend that can also show an entry point into the market is considered a trend on the H1 time frame. In this analysis, we will again use the EMA(48), an exponential moving average with a period of 48. If the H1 candlestick closes above the EMA(48), there is an uptrend and traders should open buy positions. If the H1 candlestick closes below the EMA(48), the trend is downward and traders should open sell positions.
The price is at the EMA(48), we can see a channel. Long-term, mid-term, and short-term trends do not move in one direction. That is why traders can open either sell or buy positions.
5. Japanese candlestick analysis.
The classic Japanese candlestick analysis is applied to the daily time frame. In this analysis, we will also use the daily candlestick.
A daily candlestick closed lower. The candlestick is black. It low is below the precious candlestick's low. The candlestick pattern is Hammer, a long lower shadow. An upward movement is possible.
6.Conslusion
- Volume analysis: POC has moved higher, the price dropped – BUY SELL.
- Long-term trend: up – BUY.
- Medium-term trend: up – BUY.
- Short-term trend: up – BUY or SELL.
- Japanese candlestick analysis - BUY.
Conclusion: On February 16, 2021, it is recommended to open buy and sell positions.
7. Statistics
To analyze the effectiveness of this approach, we keep data on completed transactions. We prepare forecasts and open trades on four major instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. You can also read other articles. Data from the trading account:
In February 2021, the gain is +4.95%.
At the moment, we keep the following positions opened:
09.02.21 Ethereum BUY: 1781.35; SL: 1543; the risk management is 1% of deposit of 10,000$, the trade volume is 0.42 lots.
For new positions, the Stop Loss orders is located beyond the daily extreme. Do to place the Take Profit order as we will monitor the trade moving 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.
Follow the trend and you will get profit!
