The greatest benefactor in life is not finding money or winning the lottery, but rather meeting someone who breaks your original thinking and elevates your perspective, guiding you to a better stage. Life is similar; cognition determines wealth, and underlying logic determines the superstructure!
Before enlightenment, it is as difficult as climbing to the sky; after enlightenment, it becomes easy as turning a hand. Many stock market experts find trading cryptocurrencies simple after gaining insight, while many retail investors believe that the skills of successful cryptocurrency traders come from countless hours of study and countless losses.
So how can one excel at trading cryptocurrencies? Once a person enters the financial market, it is hard to turn back. If you are currently at a loss but still confused, and plan to make cryptocurrency trading a second career, you must understand 'Bitcoin K-line and MACD trading strategies.' Understanding them deeply will help you avoid many detours. These are personal experiences and feelings, and I recommend saving them for repeated contemplation!
Without further ado, let's get straight to the valuable content! Bitcoin K-line MACD reference materials:
1. The MACD formula is: the fast exponential moving average (EMA12) minus the slow exponential moving average (EMA26) to get the fast line DIF, then use 2×(fast line DIF - the 9-day weighted moving average DEA) to get the MACD bar.
2. Basic usage of MACD: The MACD indicator is formed by combining two lines and a bar; the fast line is DIF, the slow line is DEA, and the histogram is MACD.
(1) MACD Golden Cross: DIF breaks up through DEA from below, signaling a buy.
(2) MACD Death Cross: DIF breaks down through DEA from above, signaling a sell.
(3) MACD turns from green to red: MACD value changes from negative to positive, and the market shifts from bearish to bullish.
(4) MACD turns from red to green: MACD value changes from positive to negative, and the market shifts from bullish to bearish.
(5) When both DIF and DEA are positive, meaning they are both above the zero axis, the trend is bullish. If DIF breaks up through DEA, it can signal a buy.
(6) When both DIF and DEA are negative, meaning they are both below the zero axis, the trend is bearish. If DIF breaks down through DEA, it can signal a sell. (7) When the DEA line diverges from the K line trend, it signals a reversal.
MACD is a very practical technical indicator that most stock and cryptocurrency traders use, but very few can use it effectively. In fact, if MACD is used well, it can successfully capture the starting point of a rise at relatively low levels. In practical operations, it has significant reference value.
The MACD indicator is known in Chinese as the Exponential Moving Average Divergence, a major trend indicator. It consists of five parts: the long-term moving average MACD, the short-term line DIF, red energy bars (bearish), green energy bars (bullish), and the O-axis (the dividing line between bullish and bearish). It uses the crossing of the short-term moving average DIF with the long-term MACD as a signal. The cross signals generated by the MACD indicator are relatively slow, but they are effective for formulating corresponding trading strategies.
DIF line: the difference between the short-term and long-term exponential smoothing moving averages of the closing price.
DEA Line: the M-day exponential smoothing moving average line of the DIFF line.
MACD Trading Practical Skills:
1. MACD Top Divergence Escape
Before trading, first assess the trend of Bitcoin's MACD indicator. If MACD moves in the same direction as Bitcoin's trajectory, it indicates that the coin is rising, and MACD is also rising, meaning Bitcoin is in good health, and one can confidently hold the coin for an increase. However, if the overall market is rising while MACD is declining, indicating a divergence in their movements, one must sell the coins after three divergences.
2. MACD Bottom Divergence Bottom Fishing
After a period of decline, if you want to bottom fish Bitcoin and other coins, you must first study whether there is any bottom divergence phenomenon between the MACD running trajectory and the stock price trajectory, meaning that while Bitcoin and other coins are falling, the MACD shows an upward trend. Generally, the divergence of a significant bull market lasts a long time; after the first divergence, it may not be the bottom, and some may continue to decline further. This decline can be even more severe, but the MACD does not drop any longer, indicating that the true bottom has arrived and you can bottom fish.
3. MACD, Zero Axis Buying Method
If the MACD white line and yellow line form a golden cross above the zero axis (preferably close to the zero axis), or if they form a golden cross below the zero axis but close to it, the chances of a strong market are high, and buying can lead to profits.
4. Golden Cross below the zero axis, followed by a death cross and then another golden cross.
The DIF crosses the DEA line below the zero axis but does not cross back above the zero axis or only slightly crosses it before returning below the zero axis, then dies crossing the DEA downward and again crosses the DEA line upward days later. This pattern appears when the price has fallen and the selling pressure is exhausted and should be understood as a rebound signal, allowing for strategic entry.
5. Golden Cross below the zero axis without death cross pullback reversal.
A golden cross below the zero axis without a death cross pullback reversal indicates that the DIF crosses the DEA line below the zero axis, and then does not cross above the zero axis before pulling back toward the DEA. The MACD red bars shorten, but without a death cross of the DEA, it reverses upward again, accompanied by lengthening MACD red bars. This pattern is often a bottom pattern, emerging when the price has fallen and the selling pressure is exhausted, and should be understood as a stronghold area for major players, allowing for strategic entry.
6. MACD Divergence Sell
If the market is strong, and the MACD white line is far from the yellow line, with both lines far from the zero axis, caution is needed for a pullback. When the white line turns back, it’s time to be cautious.
7. MACD Double Death Cross Sell
If the coins you hold are tied up, and the MACD white and yellow lines form a death cross above the zero axis, or a death cross below it, or if the white and yellow lines do not form a golden cross below the zero axis, slightly leveling off and then continuing downward, it indicates that the coin is completely weak, and there is likely a significant drop ahead. You must clear this coin according to the 'three absolutes' principle: never cling, never fantasize, never feel pain.
The buying pattern of the DIFF line is the aerial cable rope.
The aerial cable rope pattern refers to the situation where the DIFF line crosses above the DEA line after being below the zero axis, runs above the zero axis, and then, accompanied by a pullback in stock prices, the DIFF line also starts to pull back. When the DIFF line pulls back to the DEA line, the two lines merge into one. When they separate again to form a bullish divergence, the aerial cable rope pattern is formed. This pattern is shown in Figure 1.
Figure 1 Aerial Cable Rope Pattern
The aerial cable rope pattern is a strong bullish signal. When a golden cross forms below the zero axis and the DIFF and DEA lines successfully break above the zero axis, it indicates that a market uptrend has formed. At this time, the DIFF line pulls back and fits closely with the DEA line, indicating that the market is actively accumulating strength. Later, if the DIFF line chooses to go up, it indicates that the upward momentum has restarted, and the coin price will see a significant upward trend. Investors can actively buy when the DIFF line diverges upward.
As shown in Figure 2, on October 14, 2009, Astar Chemical's D1FF crossed the DEA line below the zero axis, and then the DIFF and DEA lines successfully broke above the zero axis. This indicates that the market's upward trend has preliminarily formed.
Figure 2 Astar Chemical Daily K-line
On November 3, 2009, the coin's DIFF line surged and then fell back, and after the DEA line merged above the zero axis, a bullish divergence appeared, forming the aerial cable rope pattern. This indicates that the upward momentum has restarted, and the coin price is about to rise significantly. Investors should pay attention to seize this buying point.
In practice, investors should pay attention to the following two aspects:
① Although this pattern appears infrequently in practice, once it appears, the coin price often rises rapidly, sometimes experiencing continuous surges for a period.
To more accurately grasp buying points, investors can combine other technical analysis tools for comprehensive judgment. In the case of Astar Chemical, on November 2, the K-line formed a bullish engulfing pattern above the 60-day moving average, indicating that the aerial cable rope pattern was about to form. Aggressive investors could buy on November 2.
DIFF:EMA(CLOSE,12)-EMA(CLOSE,26)
;DEA:EMA(DIFF,9);
MACD:2*(DIFF-DEA), COLORSTICK;
Low Position Golden Cross:=CROSS(DIFF,DEA) AND DIFF
STICKLINE(Low Position Golden Cross,0,0.3,8,0),COLORYELLOW;
JCCOUNT:=COUNT(CROSS(DIFF,DEA),BARSLAST(DEA>=0));
Second Golden Cross:=CROSS(DIFF,DEA) AND DEA
STICKLINE(Second Golden Cross,0,0.2,8,0),COLORff80ff;
DRAWICON(Second Golden Cross,dea*0.9,1)
;A1:=BARSLAST(REF(CROSS(DIFF,DEA),1));
Bottom Divergence:=REF(CLOSE,A1+1)>CLOSE AND DIFF>REF(DIFF,A1+1) AND CROSS(DIFF,DEA);
STICKLINE(Bottom Divergence,0,0.1,8,0),COLORRED;
DRAWLINE(A1=0,DEA,Bottom Divergence,DEA,0),COLORRED,linethick2;
A2:=BARSLAST(REF(CROSS(DEA,DIFF),1));
Top Divergence:=REF(CLOSE,A2+1)DIFF AND CROSS(DEA,DIFF);
DRAWLINE(A2=0,DEA,Top Divergence,DEA,0),COLORGREEN,linethick2;
Invest as naturally as breathing.
The cryptocurrency market is unpredictable; one can only explore future trends based on past data. To analyze the cryptocurrency market well, one must study the psychology of other investors. Everyone knows that the technical analysis in the cryptocurrency market is mostly a study of previous historical data. If one sticks to rigid methods or blindly imitates others, they are bound to fail. There is a phenomenon in the cryptocurrency market where the psychology of the masses surpasses other factors, becoming the greatest force influencing coin prices. Therefore, studying mass psychological analysis is essential.
Warren Buffett has always emphasized that investors should invest in products they are familiar with. In fact, he stresses not to follow the crowd. Although everyone has various personalities, individual awareness tends to gradually disappear in a crowd, leading to one's imagination being influenced by others, skewing reality and lacking logic. In the stock market and cryptocurrency market, intelligence, effort, experience, and luck are all essential. Luck often favors the hardest working, not the smartest.
Only by relaxing one’s mindset and maintaining a calm head, treating investment as naturally as breathing, can one become a winner in the cryptocurrency world and achieve desired results.
Finally, let me share a set of iron rules, which are the 19 top mentalities that can help you survive and thrive in the cryptocurrency market.
1. Avoid high prices and don't chase after rises. Maintain a calm attitude towards fluctuations in coin prices, letting them rise and fall freely without easily swaying.
2. There are no absolutes in coins; only the timing theory matters. Choosing the right buying time is what makes a good coin; otherwise, even the hottest coin is just a floating cloud. Patiently waiting for the best timing and laying out potential coins is the right path.
3. Mindset is key; restraint is paramount. Knowing it's not a buying point yet feeling anxious is a major taboo in cryptocurrency trading. Only with a stable mindset can one navigate the market.
4. Analyze calmly, ignoring emotions. Do not favor any coin; act based on market signals. Those with solid technical skills and ample funds should operate flexibly, unafraid of timing.
5. Self-reflection comes first; the market is innocent. Mistakes are all due to one's own faults; quickly summarize lessons learned to avoid repeating them.
6. Balance between technology and mindset is essential; one cannot be neglected. Blindly following trends is foolish; only wisdom reveals true insights.
7. The size of funds is not critical; the execution of strategies determines victory or defeat. Precise buying and selling make you the 'wolf' in the market.
8. Calm operation, with funds in hand, why worry about lacking good coins?
9. The psychology of luck does not forgive. Only by completely changing can one conquer the market.
10. Impatience is the enemy of cryptocurrency trading. Control your inner demons to maintain a long-lasting position. Investors often become playthings of the market due to imbalanced mental states, becoming puppets of bullish and bearish forces.
11. Good habits are the foundation for survival in the cryptocurrency market. One-time profits may be lucky, but long-term survival relies on good habits. Opportunities are frequent; the ability to seize them determines success or failure.
12. Trading cryptocurrencies is not gambling; sustained profits demonstrate true skill. Effective strategies, advancing step by step, are the best approach.
13. Patience in nurturing coins leads to great achievements. Frequent coin switching makes it hard to achieve great success. Focus on one area and work diligently to accumulate small victories into great ones.
14. Go with the market, dance gracefully. Grasp the rhythm to maneuver effortlessly. Abandon greed and fear, listen to the market's voice, and nothing can stop you.
15. Trading cryptocurrencies is like a spiritual practice; one must clearly differentiate between natural laws and human desires. The buying and selling points are the market's collective force, and following the rules will lead to steady progress.
16. The magic of compound interest cannot be ignored. A good mindset combined with skills leads to natural compound interest, causing the wealth snowball to grow larger.
17. The market is ruthless; both rises and falls can be dangerous. With a technical foundation, one must act when it's time; missing a selling point is also a mistake.
18. High selling and low buying; cost is king. Do not predict, only respond. Build positions on a large scale and adjust on a small scale to lower costs; this is the way to victory.
19. Caution is needed in favorable conditions; the market is risky. Until the coins are realized, they are just floating clouds. Chasing highs and selling lows is no different from digging one's own grave.
These 19 iron rules can help cryptocurrency enthusiasts avoid many risks, but the cryptocurrency market is complex and changeable, and one cannot rigidly apply them. It is necessary to analyze the actual situation, continue learning, and accumulate experience to make fewer mistakes and steadily protect one's wallet, achieving stable wealth growth!
Even the most diligent fisherman would not go out to sea during a storm; instead, they carefully protect their boat. This season will pass, and sunny days will come! Pay attention to the banquet and learn to fish and how to fish. The door to the cryptocurrency world is always open; only by going with the flow can one have a smooth life. Save this and keep it in mind!