The following is a strategy framework for long position investment in cryptocurrency contracts, combining trend analysis methods of the three major technical indicators: EMA, MACD, and RSI, suitable for medium to short-term trading scenarios:
One, Core Indicator Analysis
1. EMA (Exponential Moving Average)
- Function: More sensitive than SMA (Simple Moving Average), highlighting recent price weights, suitable for capturing trend initiation.
- Parameter suggestion:
- Short term: EMA7 (captures intraday trends)
- Mid-term: EMA30 (to judge swing direction)
- Long position signal:
- Golden cross: EMA7 crosses above EMA30, trend shifts from decline to rise (needs to be confirmed with other indicators);
- Price stabilizes above EMA30: support signal for the continuation of the upward trend.
2. MACD (Moving Average Convergence Divergence)
- Function: Measures momentum changes, identifies trend strength and potential reversals.
- Key signals:
- Histogram turns positive: bearish momentum exhausts, bulls begin to dominate;
- Golden cross on the zero line: DIF crosses above DEA, strengthening the upward trend;
- Divergence: Price reaches a new high but MACD does not, beware of pullback risks.
3. RSI (Relative Strength Index)
- Function: Determines overbought/oversold conditions and filters entry timing.
- Parameter suggestion: RSI14 (balance sensitivity and noise).
- Long position applicable scenarios:
- RSI rises from below 30: oversold rebound opportunity;
- RSI breaks through the 50 midline: trend shifts from weak to strong;
- RSI high-level flattening (70+): may continue to be overbought in a strong trend, needs to be combined with other indicators.
Second, Long Position Strategy Execution Process
Step 1: Trend judgment (EMA dominant)
- Bullish trend conditions:
- Price > EMA30, and EMA7 > EMA30 (slope upwards);
- Higher time frames (e.g., 4-hour/daily) trending upwards in sync (increases win rate).
Step 2: MACD momentum validation
- Confirm MACD histogram continues to expand (bullish momentum strengthens);
- Avoid going long when there is a top divergence in MACD (to prevent false breakouts).
Step 3: RSI filter entry point
- Ideal situation: RSI crosses above 50 from the 30-50 range (signal for the end of a pullback);
- Aggressive strategy: RSI briefly dips below 30 and then rebounds quickly (V-shaped reversal opportunity).
Step 4: Stop loss and take profit
- Stop loss:
- Fixed ratio (e.g., 2%-5%);
- Below EMA30 or recent swing low;
- MACD death cross or RSI drops below 40 (dynamic tracking).
- Take profit:
- Gradual take profit (e.g., 50% of position exits when RSI > 70);
- Trend disruption (EMA7 crosses below EMA30);
- Previous high resistance level or Fibonacci extension level.
Three, Adaptation to Cryptocurrency Characteristics
1. High volatility response:
- Shorten EMA period (e.g., EMA5 + EMA20);
- Reduce leverage (≤5x) to avoid liquidation due to spikes.
2. False signal filtering:
- Combine with trading volume (breakthroughs with increased volume are more reliable);
- Exclude horizontal periods (observe when MACD is close to the zero line).
3. Extreme market warning:
- RSI overbought (>80) and price deviates too far from EMA, reduce position to hedge;
- Sudden news or policy events take precedence over technical signals.
Four, Case Analysis (BTC/USDT)
Scenario: 4-hour chart, EMA7 crosses above EMA30, MACD histogram turns positive and forms a golden cross, RSI rises from 45 to 55.
Operation:
1. Long position: Price retraces to EMA30 without breaking;
2. Stop loss: 2% below EMA30;
3. Target: Previous high resistance level, reduce position when RSI > 70.
Five, Risk Warning
- Indicator limitations: EMA's lagging nature fails in extreme volatility, MACD/RSI can become dull in one-sided markets;
- Contract risk: Use caution with high leverage + low liquidity cryptocurrencies to avoid overnight positions (cost rate consumption);
- Dynamic adjustment: Adjust parameters based on the characteristics of the cryptocurrency (e.g., BTC is stable, altcoins are highly volatile).
Summary: EMA determines direction, MACD verifies strength, RSI selects timing, the success rate for long positions is highest during the resonance of the three. Need to combine position management and market sentiment (e.g., fear and greed index) for comprehensive decision-making.