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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
The analysis uses data on horizontal volumes from the Chicago Futures Exchange on daily charts. It 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 levels indicates an upward trend. Moving the maximum volume level down indicates a downtrend. The chaotic movement of the maximum volume levels indicates a flat in the market.
02/01/21 - Maximum horizontal Volume Level (ROS-Point Of Control) - 33975
02/02/21 - Maximum horizontal Volume Level (ROS-Point Of Control) - 34580
The ROS moved up, the price reaction after the infusion of this volume went up. There is a possibility that the upward movement will continue.
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:
All these trends need 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 timeframe and 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 will close above the EMA (48), then we have an uptrend and you should buy. If the daily candle will close below the EMA (48), it means that the trend is going down and you should sell.
The bitcoin 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). Also, the analysis will use the EMA (48) - an exponential moving average with a period of 48, if the H4 candle will close above the EMA (48), then the trend is upward and you should buy. If the H4 candle will close below the EMA (48), then the trend is downward and you should sell.
Several H4 candles closed above the EMA (48) and are holding higher. 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 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 will close above the EMA (48), then the trend is upward and you should buy. If the H1 candle will close below the EMA (48), then the trend is downward and you should sell.
Several H1 candles closed behind the EMA (48). Strong uptrend; long-term, medium-term and short-term trends are the same, you should buy.
5. Japanese Candlestick 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 high is higher than the high of the previous candle, which indicates an upward movement. The candle configuration is similar to Harami with confirmation of yesterday's candle. Since this candle configuration has been confirmed, an upward movement is most likely, so you should buy.
6. Conclusions
Volume Analysis: the ROS moved up, the price reaction is up - BUY.
Long-term trend: up - BUY.
Medium-term trend: up - BUY.
Short-term trend: up - BUY.
Japanese Candlestick Analysis - BUY.
General conclusion: 02/03/21- it is preferable to buy.
7. Statistics
It is necessary to keep statistics on completed transactions to analyze the effectiveness of this approach. We will continue to be engaged in this transaction:
02/02/21 Bitcoin BUY: 34830; SL: 31945; Risk per transaction: 1% of the deposit.
The stop loss is located behind the daily extreme. If you have not yet opened a deal on bitcoin, then today is a preferable day to buy. This recommendation is relevant throughout the day since trading is conducted on daily charts.
Keep it simple and trade with the trend, you will have great profit!
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