1. Analysis of ETHUSDT volume on Binance exchange.
2. Long-term trend analysis.
3. Medium-term trend analysis.
4. Short-term trend analysis.
5. Japanese candlestick analysis.
6. Conclusions.
7. Statistics.
1. Analysis of ETHUSDT volume on the Binance exchange.
In this analysis, we will use the data on horizontal trading volume from the Binance exchange on daily charts. The analysis is based on the footprint-profile theory. According to it, the movement of the level with the highest traded volume during the day can indicate a possible direction of the trend. The level with the highest traded volume is the level where the maximum number of transactions has been made. This is the level of a major market player. Accordingly, if the maximum volume level moves higher, this indicates an uptrend. A downward movement of this level indicates a downtrend. A chaotic movement signals that the market is trading in a sideways trend.
16.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 3490
17.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 3243
The POC has moved down, and the price is above the POC level. The market is moving sideways, so you can open both long and short positions.
2. Long-term trend analysis.
A trend is the trader's friend. Many market participants know this saying but do not know how to use it. The answer is simple: trade only in the direction of the trend. In this case, your trades will have more profit potential with less risk. The classic Dow Theory describes three main trends:
- long-term;
- medium-term;
- short-term.
You need to analyze these trends before opening any trade. This is what we are going to do in the analysis below.
The long-term trend in this analysis is a daily trend. Trades will be opened on the daily chart and held for several days. The analysis of the daily trend is carried out with the help of the EMA(48) - an exponential moving average with a period of 48. If the daily candlestick closes above the EMA(48), this will mean that the quotes are moving in an uptrend and we should open long positions. If the daily candlestick closes below the EMA(48), this will mean that the quotes are trading downwards and we should go short.
The price is above the EMA(48). The long-term trend is upward. Therefore, it is worth considering long positions.
3. Medium-term trend analysis.
In this analysis, the medium-term trend is a trend on the four-hour chart (H4). The EMA(48), an exponential moving average with a period of 48, will also be used in analysis. If the candlestick closes above the EMA(48) on H4, this means that the quotes are moving in an uptrend and we should buy. If the candlestick closes below the EMA(48) on H4, this means that we have a downtrend and we should sell.
The price is below the EMA(48). The medium-term trend is downward. Therefore, it is possible to open sell orders.
4. Short-term trend analysis.
The short-term trend in this analysis is a trend on the H1 chart. It can show a point where we can enter the market. Here, we will again use the EMA(48) - an exponential moving average with a period of 48. If the candlestick closes above the EMA(48) on H1, this means that the quotes are trading upwards and we should buy. If the candlestick closes below the EMA(48) on H1, this indicates that the trend is downward and we should go short.
The price is in line with the EMA(48). The short-term trend is sideways. Therefore, traders can open both long and short positions. The long-term, medium-term, and short-term trends do not coincide.
5. Japanese candlestick analysis.
The classic Japanese candlestick analysis is applied to the daily trading chart. In this analysis, we will also analyze the daily candlestick.
The daily candlestick closed upwards, the candlestick is white. The low is below the low of the previous candlestick. The candlestick pattern is Doji, with a small body and long shadows. According to the candlestick analysis, it is possible to open both long and short positions.
6. Conclusions.
Volume analysis - BUY SELL.
Long-term trend - BUY.
Medium-term trend - SELL.
Short-term trend - BUY SELL.
Japanese candlestick analysis - BUY SELL.
Conclusion: On May 18, you can open both long and short positions as different types of analysis provide different forecasts.
7. Statistics.
To analyze how effective this approach is, the data on completed transactions is tracked. The forecast is made for four instruments: Bitcoin, Ethereum, Litecoin, and BCHUSD. Gains for three months amounted to 9%, with a maximum drawdown of 4.88%. Statement:
We do not open new positions on Ethereum as the situation in the market is uncertain.
The risk is 1% per trade. Stop-loss orders for new trades can be placed beyond the daily extreme point. We do not set take-profit orders, as we will continue to move SL beyond the extreme points of the future sessions.
Since trading is carried out on the daily charts, this recommendation remains relevant throughout the day.
Trade along the trend and you will make a profit!
