1. Analysis of ETHT/USD volume on the 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 ETHT/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.
22.02.21 – The level of the maximum traded volume (POC - Point Of Control) – 1737
16.02.21 - The level of the maximum traded volume (POC - Point Of Control) – 1497
The POC has moved down. The price is above the POC level. The market seems to have entered the correctional phase. So, you can open long and short positions.
2. Long-term trend analysis.
A trend is the trader's friend. Many market participants are aware of this saying. However, they do not know how to use it. The answer is simple: trade only in the direction of the trend. In this case, 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.
The long-term trend in this analysis is a daily trend. Trades will be made on the daily chart 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 candle closed above the EMA (48), it means that we are facing an uptrend and should open long positions. If the daily candle closed below the EMA (48), it means that the trend is downward and we should open short positions.
The price is above the EMA (48). The chart shows the upward trend. In this situation, you should open long trades.
3. Medium-term trend analysis.
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 open short positions.
The price is below the EMA (48). The medium-term trend is downward. Therefore, it is recommended to open short positions.
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 in line with EMA (48). The short-term trend is flat. You can both open long and short positions. The long-term, medium-term, and short-term trends are moving in different directions.
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 downwards, the candlestick is black. Its low is below the low of the previous candlestick. It is a hammer candlestick pattern heading upward. The candlestick has a big body. The sideways movement is highly likely.
6. Conclusions.
1. Volume analysis: BUY SELL.
2. Long-term trend: BUY.
3. Medium-term trend: SELL.
4. Short-term trend: BUY SELL.
5. Japanese candlestick analysis – BUY SELL.
Conclusion: On February 24, you can open both long and short positions.
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 BCHUSD. Trading account monitoring:
February 2021: +10.93%.
Statement:
Do not open a new trade as the market situation is uncertain. When opening new positions, you should place Stop Loss beyond the daily extreme points. Do not place Take Profit as we will continue to move Stop Loss beyond the extreme points in the future sessions.
Since trading is carried out on daily charts, this recommendation is relevant throughout the day.
Trade with the trend and you will make a profit!
