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1. Bitcoin volume analysis on the Chicago Mercantile 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 candlestick analysis.
6. Conclusions.
7.Statistics.
1. Bitcoin futures volume analysis on the Chicago Mercantile Exchange (CME).
In this analysis, we will use the data on horizontal trading volume from the Chicago Mercantile Exchange on the 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.
17.02.21 – The level of the maximum traded volume (POC – Point Of Control) – 51685
18.02.21 – The level of the maximum traded volume (POC – Point Of Control) – 52140
The POC has moved up. The price is above the POC level. The market seems to start moving upwards, so it is recommended to open long positions.
2. Analysis of the long-term trend.
A trend is your friend. Many traders know this saying but few 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.
In this analysis, the long-term trend 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 it is recommended to open short positions.
On the chart, we can see an uptrend. The price is above the EMA (48). In this situation, it is recommended to open buy orders.
3. Analysis of the medium-term trend.
In our 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), then we have an uptrend and we should open buy positions. If the H4 candlestick closes below the EMA (48), then there is a downtrend and we should open short positions.
The price is located above the EMA (48). This means that the medium-term trend and the long-term trend have the same direction. Therefore, you should open buy 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 above the EMA (48). The short-term trend is upward. The long-term, medium-term, and short-term trends coincide. Therefore, we should open long positions.
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 high is within the previous candlestick. The candlestick pattern is a hummer with an upper shadow. The upward movement is highly likely.
6. Conclusions.
Conclusion: On February 19, you should consider opening long positions.
7. Statistics
To analyze the effectiveness of this approach, we will keep the data on completed transactions. We prepare forecasts and open our trades on four major instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. Please, check other articles regarding this topic.
We gained +4.95% in February 2021
We opened a new position:
18.02.21 Bitcoin BUY: 51678 SL: 48229; the risk is 1% of the deposit of $10,000$ with trading volume of 0,03 lot.
Stop-loss orders for new trades can be placed beyond the daily extreme point. We do not set take-profit orders, as we will continue to move SL beyond the extreme points of the future sessions.
Since trading is carried out on the daily charts, this recommendation remains relevant throughout the day.
Trade along with the trend and you will make a profit!
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
