In the cryptocurrency market, using candlestick charts to determine entry timing is an important method of technical analysis. Here are some methods based on candlestick charts to judge entry timing:
1. Identify trends
Uptrend: If multiple bullish candles (green) appear consecutively in the candlestick chart, and each bullish candle's closing price is higher than the previous candle's closing price, it indicates that the market is in an uptrend.
Downtrend: If multiple bearish candles (red) appear consecutively, and each bearish candle's closing price is lower than the previous candle's closing price, it indicates a downtrend in the market.
Trend reversal signals: Certain specific candlestick patterns such as hammer, inverted hammer, morning star, engulfing pattern, etc., typically appear during trend reversals and can serve as entry signals.
2. Pay attention to support and resistance levels
Support level: When the price drops to a certain range and repeatedly stops falling and rebounds, that range is the support level. If the price approaches the support level and a bullish candlestick pattern (such as a hammer) appears, one may consider entering a long position.
Resistance level: When the price rises to a certain range and repeatedly stops rising and 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, one may consider entering a short position.
3. Volume-price coordination
Volume-price coordination in an upward trend: If the price rises while the trading volume also increases, it indicates strong buying power in the market, at which point one may consider entering a long position.
Volume-price coordination in a downtrend: If the price drops while trading volume increases, it indicates strong selling power in the market, at which point one may consider entering a short position.
4. Special candlestick patterns
Hammer candlestick: Appears at the bottom of a downtrend, with a long lower shadow at least twice the size of the body, indicating a potential reversal upwards, signaling a long entry.
Inverted hammer: The shape is similar to a hammer but with the shadow above, indicating a potential upward reversal, suitable for entering long.
Three white soldiers: Composed of three consecutive bullish candles, where each candle's closing price is higher than the previous candle's high price, indicating a strong upward market, suitable for entering long.
Bullish engulfing line: A long bearish candle is immediately followed by a shorter bullish candle, and the bullish candle is completely within the body of the bearish candle, indicating that the downtrend may end, suitable for entering long.
5. Combine technical indicators
Moving average crossover: When the short-term moving average (e.g., 5-day moving average) crosses above the long-term moving average (e.g., 10-day moving average), it forms a golden cross, indicating that the market may enter an upward trend, signaling a long entry.
MACD indicator: When the short-term MACD line crosses above the long-term MACD line, forming a golden cross, it indicates that the bullish trend is strengthening, suitable for entering long.
6. Risk management
Set stop-loss: When entering a position, 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.
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