If you are a new trader or a semi-newbie, this article will give you a new understanding of the crypto world, and your trading skills will elevate to a new level.
Is there a K-line technique that can fully predict market trends?
K-lines, various commonly used technical indicators, such as: Fibonacci, Bollinger Bands, moving averages (MA), as well as various trends, formations, M-tops, doji, shooting stars, three white soldiers, etc.
If you want to learn trading techniques, K-line technical analysis is still the best way to improve win rates and trend judgment. But if you use it blindly, mixing all indicators together, you will definitely lose everything.
Techniques are tools; as tools, use their techniques and methods, but not in a fixed way. The conclusion is that there are no 100% accurate technical indicators, only methods that can help you avoid losing everything and improve your win rate!
First, let’s talk about the few indicators that Doug prefers to use in trading.
In my personal trading system, the core proportions are the combination of Chan theory and wave theory.
Then use other indicators as aids; of course, these two won’t be discussed in this article; those who understand, understand. There is no book that covers everything; go read the books yourself.
Today, we mainly discussed a few auxiliary indicators commonly used by Doug for judgment.
1. MACD.
This is called the king of indicators, applicable at various levels, simple and easy to use.
See the chart below.
Three lines: The highly fluctuating white line is the fast line, the lesser fluctuating yellow line is the slow line, and the red-green line in the middle is the zero axis.
Usage:
When white crosses above yellow, that's a death cross; crossing from below to above yellow is a golden cross. Death cross is bearish, golden cross is bullish.
If the death cross occurs below the zero axis, the bearish force is strong. After all, it is easier to see weakness in bearish situations above.
The golden cross is the same in reverse.
However, if the death cross occurs above, but extends through the zero axis, the bearish force will be strong.
Used to judge trends.
When the line is above the zero axis, it rises; when the line is below, it falls.
Alright, the article is limited; I've said this much. For beginners, just understanding this is already impressive. For more detailed learning, find me or watch videos.
For example, important divergences: relatively complex; this article is limited.
2. MA moving averages:
This is an indicator that operates on the market and is something that I think must be used.
First, let's talk about the settings used by Doug: 20, 50, 120, 200.
See the chart.
Based on price action, you will find that each price pullback and rebound is likely related to moving averages.
For example, looking at the chart, the major pullback rebound point on the hourly level has landed on the purple line at 200 three times.
A small correction at 120.
Of course, the charts displayed at each level are different, but the method of using moving averages is the same. You just need to find the current level where the line is at support. Of course, other lines can also serve as potential support and correction points. If the support line on the 15-minute time frame is 200, then on the hourly chart, it might be 50.
This is for you to understand on your own; you will know more with use.
Just use it. As for the golden cross, death cross, and divergence of moving averages, you can watch videos to learn.
I personally use the golden cross of moving averages as the basis for entry.
That way, you might be halfway up the mountain; I have better entry methods.
3. Fibonacci retracement
This is also a very useful indicator, and it is an indicator that most traders will use.
Moreover, it is simple and easy to learn! It is applicable to all levels, and the more practical experience one has, the higher the accuracy, for example, on the four-hour chart.
However, you can pull back across all levels to determine support points.
How to use them:
See the chart. Choose the level you are about to trade.
In a trend, from the lowest point of the shadow to the highest point. Then each line is a potential support.
Generally, we look at the 38.2%, 50%, and 61.8% levels.
50%, 61.8% are the most probable levels, which means this range is a potential support level.
If you also open the MA moving average, you will find that the 50 line may coincide with a certain moving average.
The same applies to observing rebounds in a downtrend (simple or not).
Of course, this is not absolute support; it is potential support.
So, where does the Fibonacci retracement support failure occur? Generally, it is at the 78% line.
In other words, if you enter at the 50 line, you can place your stop-loss at the 78 line.
You can also chase long positions, and place your stop-loss below the 50% retracement.
You can also use the 50 line as a target for profit-taking.
For more specific applications, I won't write them all out; watch videos, read books, or directly find Doug for strategies.
Note: Any indicator is a basis for market judgment, but a good entry point is not just a golden or death cross.
When learning K-lines, you must understand various K-line patterns: shooting star, engulfing, morning star, pregnant line, piercing line, etc. These are relatively good entry signals. W-bottom, head and shoulders breakout are also very good judgments.
Where can you learn these? There are a lot of resources online, even kids can learn it.
4. Volume: Best to use, depends on experience, high difficulty. I won't elaborate here; if you're interested, find me to learn.
5. Bollinger Bands, Keltner Channels, and a series of channel indicators.
This is considered an indicator that beginners often encounter and also one that new KOLs like to use for analysis.
But there are many traps.
As for the channel indicators, I can only say they have some reference significance, but I do not recommend using channel indicators for trading.
Ordinary old traders often call it a lagging channel because it changes with the market.
Good old traders who use it well will set their own indicator values. On the daily large scale, it really has reference significance, such as a potential market top. This is generally used by some KOLs who only analyze and do not engage in actual trading. Because I analyzed that Bitcoin might drop to 110k, and it was indeed right, saying it every day, but it could drop three months later.
For smaller levels, the reference significance is relatively small when there are major changes in the overall market trend; it can only be used as a secondary reference.
During market movements, such as surges or drops, I generally do not look at channels.
But for example, in a bear market, when there is no trend, or when the trend is a straight channel, you can use them.
If you want to short at your current position, check some moving averages for resistance, and if the position is also above the oscillation range, then open the Bollinger Bands, and if the position is also at the upper band, then short.
For me, it serves this purpose; it can be used or not, just to boost confidence. Maybe it works well for others; welcome to the introduction.
Many traders specializing in short contracts generally use channel indicators, which are also commonly used by beginners.
The channel can show that the range oscillates basically up and down within the channel.
Alright, there are too many indicators to cover in one article. Mastering the first three I mentioned already counts as impressive for beginners.
Knowing Chan theory and price action will open the door to a new world of trading.
So the key question is, if you've learned the K-line indicators I mentioned, can you apply them? Yes, but if learned incorrectly or over-relying, it will hinder your understanding and increase your greed.
This is the biggest difference between ordinary newbies and professional traders.
For example: Bollinger Bands, according to technical indicators.
The first and second positions have already formed an effective breakthrough of the upper band, and there hasn't been much increase; instead, it quickly retraced.
So how should we operate correctly in practical trading using K-lines and market judgment?
The length of the article is limited; I can't say much. Here I will briefly explain the basic logic:
First point: Try to trade with the trend; there aren't that many reversals in the world.
Newbies often think, 'This coin has risen, oh no, I missed it. Since it has risen so much, is it about to correct? Let me short.??? Then they get wrecked.
First, look at the large-scale trend to determine a rough direction:
For instance, the daily chart shows that on 9.24 BTC, a reversal trend has started to appear (although it is not fully formed yet). The last bottom on the daily chart is higher than the previous one. As long as it breaks through and stabilizes in the 68000~70000 range, it might really enter the next wave of upward trend; we will see by the end of the year. The large-scale formation looks bullish.
Knowing the large scale, we should be cautious about over-leveraging short positions or holding long shorts. (Note that the big trend is composed of countless small trends. When playing short waves in the market, you cannot directly copy the big trend unless you have a lot of money and don’t mind being stuck.)
First, the big trend is bullish, but on Sunday, market liquidity is low, so there wasn’t much volatility. If we look at whether there are major negative or positive news in the market today, we checked and confirmed that there are none. Then, we check the long-short ratio, which is basically flat, and look at the volume, which hasn’t fluctuated much. Knowing these four points, we can basically determine that today is a short wave market.
So, at the current position of 63000,
Line of 9.23.
When the Fibonacci average is drawn, the 30-minute line shows that the price oscillates in the range of 62500~65000. The trend is in the stage of upward consolidation, so we primarily focus on falls, and we directly set a long position with strong support at 625. As long as there is no strong break, we basically wait for a rebound! Of course, I generally enter on the right side when playing Chan theory because I monitor the market all day!
Recently, as we anticipated, the upward trend continues. See the chart below ↓
Line of 9.23.
On the hourly main trend, it has just changed, the indicators are not obvious, but it points to 63000.
Conclusion: Big trend → Small trend → Current market movement (upwards, downwards, sideways, or high volatility) → Find support and resistance levels. Identify entry points, stop-loss points, and target points. Calculate the risk-reward ratio.
Find the entry signal and open the position. Wait for the result.
This is a trade.
Trends are the results of market forces, supported by supply and demand relationships, capital flows, investor psychology, etc. These factors will not be easily changed in a short time.
The big trend is formed by small trends; small trends obey the big trend. When a trend reverses, the sensitivity of small trends is higher than that of large cycles!
Then about the long-short ratio:
Then one day, I posted a magical call based on the liquidation value, which was particularly accurate. As a result, many fans went to learn, and someone even posted the same website, using liquidation value to teach trading. See this magical call → Click to view the post.
When looking at the K-line chart, you will know if it's significant. Everyone was shouting bearish that day. Clearly, the trend is rising, and the bearish liquidity is slowly forming above, and the price is closer to bearish liquidity. The balance of long and short positions has become imbalanced. Still dropping? Are you expecting to make over 600 million on your short positions?
Once this post came out, the next day the fans pushed people to learn, I was really impressed.
So, as mentioned at the beginning of the article, any method is useful, but no method can be applied indefinitely because markets are changing.
My liquidity judgment combines long and short ratios. It’s not just about looking at this.
It doesn’t mean that if bearish liquidity is high, it will definitely rise, and if bullish liquidity is high, it will definitely fall.
Any market performance is a reflection of the emotional state at that time.
Liquidity, if not severely imbalanced, generally follows the trend, for example, if it rises, it will prioritize clearing shorts. It should be judged in conjunction with the indicators we learned earlier.
What we can do is improve the win rate, ensure profits, and profit over cycles. Wait for the market, and not being cleared by the market is profit!
