Investment decisions based on BTC technical trends require multi-dimensional analysis and strict risk management. The following are key steps and points:
1. Clarify Core Dimensions of Technical Analysis
1. Trend Judgment
◦ Determine medium to long-term trends using moving averages (e.g., 50-day moving average, 200-day moving average): A bullish arrangement of moving averages (short-term moving average crossing above long-term moving average) may indicate an uptrend; conversely, a bearish arrangement may signal a downtrend.
◦ Trendline Assistance: Connect high points or low points to form a trendline. A price breakout from a trendline may signal a trend reversal (e.g., if the price breaks below an ascending trendline, be cautious of a pullback).
2. Support and Resistance Level Identification
◦ Key support/resistance levels include historical price dense transaction areas, previous highs and lows, and Fibonacci retracement levels (e.g., 38.2%, 50%, 61.8%). For example, if the price stops falling near a support level, consider a light long position; if it encounters resistance at a resistance level, consider reducing positions or shorting.
3. Technical Indicator Combination Verification
◦ MACD: A golden cross (DIFF crossing above DEA) may indicate bullish activation; a death cross (DIFF crossing below DEA) may indicate bearish dominance; a histogram turning from negative to positive or vice versa can assist in judging momentum strength.
◦ KDJ/RSI: Overbought zone (KDJ > 80, RSI > 70) may indicate a short-term pullback; oversold zone (KDJ < 20, RSI < 30) may indicate a rebound, but must be combined with the trend to avoid the situation of 'more oversold'.
◦ Bollinger Bands: A price breakout above the upper band may indicate overbought conditions, while a breakout below the lower band may indicate oversold conditions; a contraction followed by expansion of the Bollinger Bands often accompanies trend acceleration.
2. Trading Strategies and Risk Control
1. Trend Following Strategy
◦ In an uptrend, if a pullback occurs to a support level (e.g., 50-day moving average), consider averaging into a long position with a stop-loss set below the support level; in a downtrend, if a rebound occurs to a resistance level, consider a light short position with a stop-loss set above the resistance level.
◦ Example: If the BTC price breaks below the 20-day moving average during an uptrend, consider reducing positions and observing, and only consider re-entering once the price re-establishes above the moving average.
2. Range Trading Strategy
◦ When the price oscillates within clear support/resistance zones, consider going long near support and short near resistance, with stop-loss set outside the range and take profit set at 50%-70% of the range width.
3. Position and Stop-Loss Management
◦ Position size for a single trade should not exceed 5%-10% of total capital to avoid full position operations.
◦ Stop-loss levels must be clear: For long positions, set a stop-loss 2%-3% below the support level; for short positions, set a stop-loss 2%-3% above the resistance level to prevent extreme market conditions from wiping out positions.
3. Combine Market Environment and Fundamentals
• Limitations of Technical Analysis: Technical indicators may be influenced by capital manipulation or sudden news (e.g., policy regulation, major events). They need to be combined with fundamentals (e.g., macroeconomics, industry policies, market sentiment) for comprehensive judgment. For example, when expectations for Fed interest rate hikes rise, even if the technicals are bullish, they may be suppressed by macro headwinds.
• Market sentiment reference: Pay attention to the Fear and Greed Index (e.g., below 25 is the fear zone, which may indicate a rebound; above 75 is the greed zone, which may indicate a pullback), and changes in open interest (when long and short positions are imbalanced, it may trigger reverse volatility).
4. Avoid Common Pitfalls
• Do not blindly rely on a single indicator (e.g., entering long positions solely based on a MACD golden cross; must consider trends and support levels).
• Do not chase prices or sell on dips: When prices break out quickly, first confirm the validity of the breakout (e.g., a breakout with volume that holds above support/resistance for more than 24 hours) to avoid 'false breakout' traps.
• Do not hold positions: Strictly execute stop-loss orders to avoid expanding losses.
Summary
Technical analysis is an auxiliary tool, with the core being to construct trading logic through 'trend + indicators + position management', while respecting market risks. New traders are advised to start with small positions to experiment and gradually accumulate experience, avoiding blind operations solely based on technical signals. Investment decisions should align with one's risk tolerance, avoiding following the crowd and greed, to maintain rationality amid volatility.