Keep up with Bitcoin's fluctuations
Bitcoin is regarded as the barometer of the cryptocurrency market; the fluctuations of most smaller coins are influenced by it.
Cryptocurrencies like Ethereum, which have a strong conceptual logic, may occasionally deviate from Bitcoin and experience a unilateral market trend, but other altcoins generally struggle to escape Bitcoin's 'control'.
So, closely monitoring the fluctuations in Bitcoin's trading can provide us with important references for trading other cryptocurrencies.
Seize the golden moments of trading
From 24:00 to 1:00 the next day is a special trading period in the cryptocurrency market, where the 'money-making beam' phenomenon is likely to occur. During this time, it is the trading volume period for most parts of the world, and various unexpected situations may arise.
Friends who want to buy at low prices or sell at high prices can place an ultra-low buy order or set an ideal sell order for passive income before going to bed; you might just get lucky and have a deal.
Pay attention to USDT price trends
Generally speaking, USDT and Bitcoin move in inverse directions.
When you find that USDT is rapidly rising, be vigilant about a potential Bitcoin crash; and when Bitcoin rises, it is often the golden low point to buy USDT.
By grasping the relationship between the price movements of the two, better trading decisions can be made.
Pay attention to financial news from various central banks
The volatility in the cryptocurrency market is deeply influenced by the attitudes of various governments towards Bitcoin. If a government takes measures to crack down or control, the market is likely to decline.
Additionally, changes in U.S. financial policy, such as the recent proposal to tax the wealthy, can have a significant impact on the cryptocurrency market.
Therefore, paying attention to the financial news from various central banks every day is an essential task for cryptocurrency traders.
Seize key time periods
Every morning from 6 to 8 o'clock is a key time period for judging buying and selling, and can also be used to determine the trend for the day.
If the price has been declining continuously from 0 to 6 o'clock, and it is still declining during this period, then it is a good time to buy or add to the position, and the market is likely to rise on that day;
If the price has been rising continuously from 0 to 6 o'clock, and it is still rising during this period, then it is a selling opportunity, and the market is likely to decline on that day.
Be mindful of 'Black Friday'
There is a saying in the cryptocurrency market about 'Black Friday'. There are often significant drops on Fridays, but there are also times of sideways movement or significant increases. Although not particularly accurate, it is still necessary to pay some attention to the news.
Pay attention to trading volume
Trading volume is the lifeline of digital currencies.
For cryptocurrencies with a certain level of trading assurance, if the price drops, don't worry too much; patiently holding is likely to break even.
It may take as short as a week or as long as about a month.
If you have extra money, you can add to your position in batches to lower your average cost, which will help you break even faster;
If you don't have spare money, then just be patient; it often won't disappoint you.
Avoid frequent trading
For the same cryptocurrency, holding for the long term in spot trading usually yields much higher returns than frequent trading, which tests the patience of investors.
Frequent trading may not only increase trading costs but also lead to wrong decisions due to emotional fluctuations.
Application of K-line and moving average
In cryptocurrency trading, K-line theory has certain applicability, but not all indicator analyses are useful. Although the accuracy of K-line techniques is not 100%, many people find them not very useful after learning, but in fact, based on the experience of many experts, K-line technology plays a key role in analyzing the long-term trends of cryptocurrency prices.
No matter where the cryptocurrency price goes, it will be reflected in trading. We can use these techniques to understand the price movements.
Moving average rules: building a trend framework
In the trend cycle of a 1-hour chart, we can use three EMA moving averages to build a trend framework: the fast line 21 represents short-term momentum, the medium line 55 reflects the medium-term direction, and the slow line 144 defines the long-term trend.
When the moving averages show a bullish arrangement of 'fast line > medium line > slow line', the market is in a strong upward cycle; conversely, it indicates a bearish dominance.
This arrangement can effectively filter out noise; even if the moving average turns, as long as the order of arrangement remains unchanged, the trend direction is still valid.
However, the moving average has the drawback of being lagging.
We can make up for this through the 'Trend K-line Confirmation' mechanism: when the price breaks through the arrangement of moving averages, wait for the 15-minute chart to show the same direction K-line (such as a large bullish candle in a bullish trend) before entering the market. This way, we can avoid false breakouts and capture the trend acceleration phase.
Parameter selection also has its logic; a 21-period corresponds to monthly fluctuations, a 55-period fits quarterly trends, and a 144-period resonates with annual lines.
This combination has a stable win rate of over 65% in historical backtesting of forex, futures, and other varieties, with a risk-reward ratio of 1:2.3.
The support and resistance effects of moving averages
Important parameter moving averages have support and resistance effects.
When the market tests important parameters of the moving average from below to above, it will be under pressure, with expectations of a pullback or reversal downwards;
When the market tests important parameters of the moving average from above to below, it will find support, and there is an expectation of a pullback or reversal upwards.
In practice, we can choose these important parameter moving averages and combine them with some reversal structures or patterns for trading.
For example, in the 1-hour chart of ETH/USDT in May 2024, EMA21/55/144 shows a bullish arrangement, but the price has pulled back to the 55 moving average three times without breaking.
At this time, observe the 15-minute chart and find that each pullback is accompanied by shrinking trading volume and a doji pattern, which is a typical 'trend continuation signal'.
Ultimately, ETH broke through its previous high, with a single wave increase of 37%.
Moving average crossover to determine trend and entry timing
The crossover of moving averages is also a commonly used analytical method.
Add two moving averages to the chart; the one with a smaller parameter is the fast line, which changes quickly; the one with a larger parameter is the slow line, which changes slowly.
Moving average crossovers have two main uses: one is to determine direction, where the slow line crossing above the fast line is a standard for confirming a bullish trend; the slow line crossing below the fast line is a standard for confirming a bearish trend.
The second is to determine entry signals; when the slow line crosses above the fast line, it is a signal to enter long; when the slow line crosses below the fast line, it is a signal to enter short.
For example, in a 1-hour K-line chart of a certain spot gold, after the K-line crosses below the moving average, the trend is judged to be bearish, waiting for the K-line to pull back to the moving average for resistance and not breaking, then breaking the previous low point downwards to enter short, with the stop-loss set at the high point of the pullback.
After the first order enters the market, if the market experiences a decline and then tests the moving average again, gaining resistance, after breaking the low again, you can enter the market to increase your position again.
Combining moving averages with other indicators
Moving averages can be combined with indicators such as Fibonacci retracement and MACD to improve the accuracy of trading decisions.
For example, after the moving averages confirm direction with a golden cross or death cross, the market has usually run a certain distance, and entering at this time may result in an unreasonable risk-reward ratio.
By combining with Fibonacci retracement, after finding the key positions for trend pullbacks, you can enter the market with smaller stop-loss spaces and more reasonable risk-reward ratios.
Similarly, when the market tests the moving average with a reversal expectation, if MACD also shows a divergence pattern, it forms a resonance for market reversal. You can combine small-level moving averages to enter the market; this way, the stop-loss space is small, and if the market moves, the risk-reward ratio will be quite ideal.
Trading is a long-term practice. To gain something in the cryptocurrency market, you must follow the rules and build your own trading system. I hope this set of cryptocurrency trading strategies can provide useful references for everyone in cryptocurrency trading, and I wish everyone can achieve ideal profits.
Chen Xi only does real trading, and the team still has seats available to join. $BTC $ETH #新手小白 #操作思路
