In the cryptocurrency market, using candlestick charts to determine entry timing is an important method of technical analysis. Here are some methods for judging entry timing based on candlestick charts:
1. Identify Trends
• Upward Trend: If there are multiple consecutive bullish candles (green) in the candlestick chart, and the closing price of each bullish candle is higher than the previous one, it indicates that the market is in an upward trend.
• Downward Trend: If there are multiple consecutive bearish candles (red) and the closing price of each bearish candle is lower than the previous one, it indicates that the market is in a downward trend.
• Trend Reversal Signals: Certain specific candlestick patterns such as hammer, inverted hammer, morning star, engulfing patterns, etc., usually appear during trend reversals and can serve as entry signals.
2. Pay Attention to Support and Resistance Levels
• Support Level: When the price falls to a certain range and bounces back multiple times, that range is the support level. If the price approaches the support level and a bullish candlestick pattern (such as a hammer) appears, you may consider entering long.
• Resistance Level: When the price rises to a certain range and repeatedly falls back, that range is the resistance level. If the price approaches the resistance level and a bearish candlestick pattern (such as a hanging man) appears, you may consider entering short.
3. Volume-Price Coordination
• Volume-Price Coordination in Upward Trend: If the price rises and the trading volume also increases, it indicates strong buying power in the market, and you may consider entering long.
• Volume-Price Coordination in Downward Trend: If the price falls and the trading volume increases, it indicates strong selling pressure in the market, and you may consider entering short.
4. Special Candlestick Patterns
• Hammer: Appears at the bottom of a downward trend with a long lower shadow, at least twice the body length, indicating that the market may reverse upwards and is a signal to enter long.
• Inverted Hammer: The shape is similar to a hammer, but the shadow is on top, indicating that the market may reverse upwards and is suitable for entering long.
• Three White Soldiers: Composed of three consecutive bullish candles, each closing price is higher than the previous candle's high, indicating strong upward movement in the market and is suitable for entering long.
• Bullish Engulfing: A long bearish candle is followed by a shorter bullish candle, and the bullish candle is completely within the body of the bearish candle, indicating that the downtrend may be ending and is suitable for entering long.
5. Combine Technical Indicators
• Moving Average Crossover: When a short-term moving average (such as the 5-day moving average) crosses above a long-term moving average (such as the 10-day moving average), it forms a golden cross, indicating that the market may enter an upward trend and is a signal to go long.
• MACD Indicator: When the short-term MACD line crosses above the long-term MACD line, it forms a golden cross, indicating that the bullish trend in the market is strengthening and is suitable for entering long.
6. Risk Management
• Set Stop-Loss: When entering the market, it is recommended to set a stop-loss point to control risk. The stop-loss point can be set outside key support or resistance levels.