I started trading coins in early 2015 and have made over 30 million in profit over the years.
As an old hand in the crypto world, I've unknowingly traded in this space for 10 years. It's truly not easy to survive in this market! I've been beaten by market manipulators and experienced numerous liquidations, felt lost at times, and countless times hid in dark corners puffing away on cigarettes. This is the price of growth!
Today, I want to share a summary of my years of trading experience for free, hoping it can help everyone!
Here are the indicators I commonly use. I don't rely on just one but look at all of them in combination!
I. Trend Judgment Indicators
Moving Average (MA)
Definition: A curve formed by calculating the average price over a specified period, commonly using 5-day, 10-day, or 50-day moving averages.
Buy/Sell Signals:
✅ Golden Cross: Short-term moving average crosses above long-term moving average (e.g., MA5 > MA20), buy signal.
❌ Death Cross: Short-term moving average crosses below long-term moving average, sell signal.
Case Study: BTC started a major uptrend after breaking MA50 in March 2025, soaring 58% in a single month.
MACD Indicator
Composition: Consists of DIFF line (fast line), DEA line (slow line), and histogram
Key Signals:
✅ Golden Cross: DIFF line crosses above DEA line (bull market initiation signal)
❌ Death Cross: DIFF line crosses below DEA line (bear market warning signal)
Case Study: In April 2025, when ETH broke new highs, the MACD golden cross occurred, followed by a 40% increase over the next seven days.
II. Overbought and Oversold Indicators
Relative Strength Index (RSI)
Definition: 0-100 range fluctuation, measuring the speed of price changes
Operational Rules:
Overbought Zone (RSI > 70): Take partial profits, be wary of pullbacks
Oversold Zone (RSI < 30): Buy the dip, position for a rebound.
Case Study: SOL rebounded 32% within three days after its RSI fell to 25 in May 2025.
KDJ Indicator
Three-line composition: K-line (sensitive), D-line (medium-term), J-line (extreme volatility)
Buy/Sell Points:
✅ J-line touches the bottom (<0): Short-term buying signal
❌ J-line touches the top (>100): Short position risk avoidance signal
Practical Example: DOGE experienced a single-day drop of over 15% after multiple J-line overbought signals.
III. Volatility Indicators
Bollinger Bands (BOLL)
Three Bands Composition: Upper Band (pressure), Middle Band (trend), Lower Band (support)
Trading Strategy:
✅ Opening Expansion: Price breaks above the upper band, chasing the rise (e.g., BTC breaking $110,000)
❌ Narrowing Oscillation: Price approaches the middle band, main focus is observation.
Case Study: In May 2025, after the Bollinger Bands of APE coin contracted, there was an explosive rally with a 68% amplitude in 24 hours.
Average True Range (ATR)
Function: Quantify market volatility intensity, assist in stop-loss settings
Formula: Stop Loss = Opening Price ± (1.5 × ATR)
Application: When BTC's intraday ATR = $1500, the stop loss should be ≥ $2250
IV. Volume Indicators
Volume
Core Principle: Rising prices require increased volume, while falling prices with decreased volume indicate a reversal.
Divergence Signal:
❗ Price rises with decreasing volume: Bullish exhaustion, be wary of a peak (e.g., LTC trends in April 2025).
❗ Price drops with increasing volume: Strong bearish momentum, timely stop loss.
Funding Rate Arbitrage
Strategy: Short when the funding rate is positive, long when negative, to profit from the rate difference.
Tools: Automated monitoring platforms like XBIT can yield annual arbitrage returns of up to 35%.
Five Essential Combination Techniques
MA+BOLL Dual Resonance: Heavy buying when price simultaneously breaks above MA50 and the upper Bollinger band.
RSI+MACD Divergence: Price reaches new highs but MACD does not, reverse when RSI > 80.
ATR Dynamic Stop Loss: Adjusts stop-loss based on volatility to avoid being washed out.
KDJ Ultra-Short Line Sniper: Long when J-line < 0 using 1-minute K-line, take profit at 3%
Monitoring Whale Addresses: Tracking Smart Money on-chain transfers, laying out ahead of time.
I have personally tested this method, turning 500,000 into 10 million, simply by learning to read 16 types of K-lines and accurately determining buy and sell points! The win rate is as high as 99%, suitable for everyone!
K-line Body
The K-line body represents the asset's opening and closing prices. The position of the opening or closing price depends on the K-line and whether the price is bullish or bearish during a specific time frame. In a bullish market, the closing price will be above the opening price, while in a bearish market, it will be the opposite.
K-line Shadows
Each K-line usually has two so-called shadows, although this is not a fixed rule. Shadows represent the highest and lowest prices during a specific period. That is, the upper shadow represents the maximum value, while the lower shadow represents the minimum price reached. Sometimes a K-line may have only one shadow, occurring when the other shadow overlaps with the opening or closing price, that is, aligning with the body on the same horizontal line.
K-line Color
The color of the body indicates the direction of price movement. Typically, a green (or white) body indicates a price increase, while a red (or black) body indicates a price decrease. Most platforms display bodies in green or red. Therefore, if the body is green, the highest point of the body will represent the closing price.
How do K-lines function in trading?
So far, K-line charts are the most comprehensive graphical representation of asset prices. Cryptocurrency traders borrowed this type of chart from stock and forex trading. Unlike line charts that only display closing prices, K-line charts provide a wealth of historical price-related information due to their structural characteristics (as mentioned above).
K-lines are formed sequentially over time, and even without technical indicators, they can help you understand the overall trend as well as resistance and support lines. Additionally, specific patterns formed by K-lines can serve as buy or sell signals. The use of K-line charts is particularly important for cryptocurrency trading due to its high volatility and the need for detailed technical analysis.
16 Popular K-line Patterns
K-line patterns are diverse, and in this article, we will introduce the most popular and reliable patterns, starting with bullish patterns that appear after a downtrend and indicate an impending upward reversal. Cryptocurrency traders typically open long positions when these patterns emerge.
1. Hammer
The Hammer K-line consists of a shorter body and a long lower shadow. The reason this pattern is called the Hammer is due to its shape resembling an upright hammer. Generally, the Hammer appears at the bottom of a downtrend. This pattern indicates that buyers have resisted selling pressure during this time and pushed prices higher. The Hammer can be either green or red, but the green Hammer typically indicates a stronger bullish trend than the red one.
2. Inverted Hammer
The Inverted Hammer is similar to the standard Hammer but has a much longer upper shadow while the lower shadow is very short. This pattern indicates buying pressure exists, and short sellers attempt to push prices down but do not succeed. As a result, buyers return with stronger pressure, pushing prices up.
3. Bullish Engulfing
Unlike the previous two patterns, the Bullish Engulfing consists of two K-lines. The first K-line should be a shorter red body, engulfed by a larger green body. The opening price of the second K-line is lower than the previous red K-line, increasing buying pressure and leading to a reversal of the downward trend.
4. Piercing Pattern
Another double K-line pattern is the Piercing Pattern, which may appear at the bottom of a downtrend at a support level or during a pullback expected to show bullish movement. This pattern consists of a long red K-line followed by a long green K-line. The key to this pattern is that there is a significant gap between the closing price of the red K-line and the opening price of the green K-line. The closing price of the green K-line is significantly higher than the opening price, indicating strong buying pressure.
5. Morning Star
The Morning Star pattern is more complex because it consists of three candles: a long red candle followed by a short-bodied candle and a long green candle. The Morning Star pattern indicates that selling pressure in the first period is weakening, and a bull market is forming.
6. Three White Soldiers
Another pattern formed by three K-lines is the Three White Soldiers. This pattern consists of three long green K-lines, usually with short shadows. The main condition is that there are three consecutive green K-lines, and both the opening price and closing price must be above the previous period's price. This pattern is seen as a strong bullish signal following a downtrend.
Next, we will discuss a set of bearish patterns expected to reverse the upward trend, typically appearing in resistance zones. These patterns often prompt traders to close long positions or open short positions.
7. Hanging Man
The Hanging Man is a short-bodied candle with a long upper shadow, either green or red. It usually appears at the end of an uptrend, indicating an impending sell-off, but short sellers may temporarily push prices higher before losing control.
8. Shooting Star
The Shooting Star is the opposite of the Inverted Hammer. This pattern consists of a short body and a long upper shadow, typically a red candle. Generally, the market will gap up at the open of the candle and spike to a local high, with the closing price slightly below the opening price. Sometimes the body is almost nonexistent.
9. Bearish Engulfing
The Bearish Engulfing Pattern is the opposite of the Bullish Engulfing Pattern, where the first K-line has a small green body completely covered by a subsequent long red K-line. This pattern appears at the peak of an uptrend, indicating a potential reversal. The lower the closing price of the second K-line, the stronger the bearish momentum.
10. Evening Star
The Evening Star represents a specific three-candle pattern. It consists of a short-bodied candle in the middle, flanked by longer green candles on either side and a larger red candle. The closing price of the third candle is below the midpoint of the first green candle. This pattern usually appears at the top of an uptrend, indicating a potential reversal.
11. Three Black Crows
The Three Black Crows pattern consists of three long straight red candles, with short or almost nonexistent shadows. The opening price of each new candle is roughly the same as the previous candle's price, but each closing price drops significantly. This is a strong bearish signal.
12. Dark Cloud Cover
The Dark Cloud Cover pattern is similar to the Piercing Line but in reverse. This pattern indicates a bearish reversal, consisting of two K-lines where the opening price of the red K-line is higher than the previous green K-line body, and the closing price is below the midpoint. This pattern indicates that sellers have taken control of the market, pushing prices down. If the shadows of the K-lines are short, traders can expect a strong downward trend.
In addition to bullish and bearish patterns that predict trend reversals, there are also neutral patterns or those indicating the continuation of bullish or bearish trends.
These include:
Doji
Spinning Top
Descending Three Methods
Ascending Three Methods
13. Doji
The body of the Doji K-line is very small, with long shadows. This pattern is generally seen as a continuation pattern, but traders should also be cautious as it may indicate a reversal. To avoid confusion, it's advisable to wait for several K-lines to appear after the Doji before opening a position, when the situation becomes clearer.
14. Spinning Top
Similar to the Doji, the Spinning Top also has a short body. However, the shadows on both ends of this pattern are of equal length. This pattern also indicates sideways movement and may suggest that prices are consolidating after a significant rise or fall.
15. Descending Three Methods
The Descending Three Methods is a pattern formed by five K-lines arranged in a specific way, indicating the continuation of a downtrend. This pattern consists of two longer red bodies at both ends and three smaller green bodies in the middle. The green K-lines' bodies are entirely covered by the bearish red bodies, indicating that buyers lack sufficient strength to reverse the downward trend.
16. Ascending Three Methods
The Ascending Three Methods pattern is the opposite of the previous one, typically appearing in an uptrend. This pattern consists of two longer green bodies at both ends and three smaller red bodies in the middle.
How to Read K-line Charts
K-line charts contain a wealth of historical data and information and are easy to read when combined with practice. Besides the K-line patterns discussed above, there are many other K-line charts formed by specific arrangements, such as double tops and double bottoms, flags, and triangular flags.
Even novice or seasoned traders can read K-line charts by visually assessing overall trends. These visual materials usually provide ample insights to help traders identify specific patterns among K-lines and their compositions, especially at resistance and support levels.
Common Terms in K-line Charts
The following terms related to K-line charts are for your reference during trading:
Forming Pattern - A K-line pattern that is not yet fully formed but has initial characteristics
Formed Pattern - A fully developed pattern that can be regarded as a bullish or bearish signal
Opening Price - The opening price of the K-line
Closing Price - The closing price of the K-line.
Highest Price - The highest price covered by the K-line during the period
Lowest Price - The lowest price covered by the K-line during the period.
Advantages of Using K-line Patterns
K-line patterns help cryptocurrency traders understand future trends more clearly. In other words, K-line patterns serve as signals to help traders decide when to open long or short positions and when to enter or exit the market. For example, swing traders view K-line charts as indicators for determining reversal and continuation trading patterns.
K-line charts and their patterns can help traders determine trends, understand momentum, and keep an eye on current market sentiment in real-time.
Mnemonic Methods for K-line Patterns
If you want to quickly identify K-line patterns, traders need to familiarize themselves with K-lines by observing charts and trading with small amounts. A good entry point is to focus on learning single K-line patterns and carefully analyze patterns made up of two K-lines.
It’s best to start with one pattern until you are confident in easily identifying it during price fluctuations.
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