Below is an investment strategy framework for long positions in cryptocurrency contracts, primarily based on EMA trend analysis, supplemented by MACD and RSI verification logic:
One, core logic: EMA trend determination
EMA (Exponential Moving Average) is a core tool for trend tracking, characterized by giving more weight to recent prices, allowing for quicker reflection of short-term trend changes.
Parameter suggestions:
- Short-term EMA: 7-20 periods (to capture short-term momentum)
- Mid-term EMA: 50-100 periods (to confirm mid-term trend)
- Long-term EMA: 200 periods (to determine long-term trend direction)
Strategy rules:
1. Trend direction confirmation:
- Bullish alignment: short-term EMA > mid-term EMA > long-term EMA (confirmation of upward trend)
- Price position: price stabilizing above short-term EMA (e.g., EMA20), if it retraces without breaking it is considered support.
2. Entry signals:
- EMA golden cross: short-term EMA crosses above mid-term EMA (e.g., EMA20 crosses above EMA50), combined with price breaking key resistance levels.
- Buy on retracement: price retraces to EMA (e.g., EMA50) in an upward trend and rebounds, combined with increased trading volume.
3. Stop loss settings:
- Stop loss when price falls below short-term EMA (e.g., EMA20) and does not quickly recover, or falls below mid-term EMA (e.g., EMA50).
Two, MACD auxiliary verification
MACD is used to confirm trend strength and potential reversal signals.
Parameters: default (12,26,9) or adjusted (e.g., 5,35,5) to adapt to cryptocurrency volatility.
Strategy rules:
1. Trend momentum verification:
- MACD histogram expansion: MACD bars (difference) above the zero axis and continuously increasing, indicating strengthening bullish momentum.
- MACD line golden cross: DIF line crosses above DEA line and is above the zero axis (strengthening bullish signal).
2. Divergence warning:
- Top divergence: price makes a new high but MACD bars or DIF line do not, indicating potential retracement risk (long positions should be cautious).
Three, RSI filtering for overbought/oversold
RSI (Relative Strength Index) is used to avoid excessive chasing in extreme market conditions.
Parameters: 14 periods (default) or shorten to 7 periods (to increase sensitivity).
Strategy rules:
1. RSI characteristics in trends:
- In a strong upward trend, RSI may stay above 50-70 for a long time; overbought (RSI > 70) is not necessarily a reversal signal, but a sign of trend continuation.
- RSI divergence: price makes a new high but RSI does not, which may indicate momentum exhaustion (must be judged in conjunction with EMA trend).
2. Entry filtering:
- Avoid chasing long positions when RSI > 75, wait for a pullback to the RSI 50-60 range to enter.
Four, multi-strategy comprehensive process
1. Trend determination:
- EMA bullish alignment (short-term > mid-term > long-term) + price stabilizing above EMA20.
2. Momentum verification:
- MACD histogram expanding above the zero axis + DIF and DEA in bullish alignment.
3. Risk filtering:
- RSI not overbought (<70) or retracing to neutral range (50-60).
4. Entry point selection:
- Retracement to EMA support (e.g., EMA50) and rebound + increased trading volume.
5. Stop loss and take profit:
- Stop loss: 1-2% below EMA20 or previous low support level.
- Take profit: phased take profit (e.g., close 50% of the position at resistance, track remaining with EMA trend).
Five, precautions
1. Market environment adaptation:
- Cryptocurrencies are highly volatile; EMA parameters need to be adjusted based on the characteristics of the coin (e.g., use EMA50/200 for BTC, EMA20/50 for altcoins).
- Avoid opening positions during low liquidity periods or before major events.
2. Risk control:
- Leverage should not be too high (recommended ≤ 5x), to avoid liquidation in one-sided markets.
- Dynamically track changes in EMA support and adjust stop loss in a timely manner.
3. Backtesting verification:
- Test different period combinations (e.g., EMA20/50 + MACD5/35/5) for win rates and profit-loss ratios in historical data.
Summary: Use EMA as the core trend filter, MACD to verify momentum strength, and RSI to exclude excessive chasing risks; together they form a multi-dimensional verification system that can improve the win rate and stability of long position strategies.