- Analysis of volumes for the instrument LTCUSDT from the Binance exchange.
- Analysis of the long-term trend.
- Analysis of the medium-term trend.
- Analysis of the short-term trend.
- Japanese candlestick analysis.
- Conclusions.
- Statistics.
1. Analysis of volumes for the instrument LTCUSDT from the Binance exchange.
This analysis uses data on horizontal volumes from the Binance exchange on daily charts. It is based on the Footprint-Profile theory, in which the movement of the level of the maximum horizontal volume per day can indicate the likely direction of the trend. The maximum volume level is the level at which the maximum number of transactions was made, that is, the level of a large player. Accordingly, the upward movement of the maximum volume levels indicates an upward trend. A downward movement of the maximum volume level indicates a downward trend. Chaotic movement of the maximum volume levels indicates a flat in the market.
05/26/21 - Maximum horizontal volume level (POC - Point Of Control) - 194
05/27/21 - Maximum horizontal volume level (POC - Point Of Control) - 197
The POC moved upwards, the price is below the POC level. There is a sideways movement in the market, you can buy and sell.
2. Analysis of the long-term trend.
A trend is a friend of a trader. Many traders know this saying but don't know how to use it. The answer is simple: trade only in the direction of the trend. This way your trades will have more profit potential with less risk. According to classical Dow theory, there are three main trends:
- long-term;
- medium-term;
- short-term.
You need to analyze all these three trends before opening any deal. This is what we will do in this analysis.
The long-term trend in this analysis is the daily trend. Trades will be executed on the daily timeframe and held for several days. The analysis of the daily trend is carried out using the EMA (48) - an exponential moving average with a period of 48. If the daily candle closes above the EMA (48), then we have an upward trend in front of us and you should open long positions. If the daily candle closes below the EMA (48), then the trend is downward and you should open short positions.
The price is below the EMA (48). The long-term trend is downward, so short positions should be considered in this situation.
3. Analysis of the medium-term trend.
In this analysis, the medium-term trend will be the trend on the 4-hour chart (H4). EMA (48), an exponential moving average with a period of 48, will also be used for analysis. If the H4 candlestick closes above the EMA (48), then the trend is upward and opening long positions should be considered. If the H4 candlestick closes below the EMA (48), then the trend is downward and opening long positions should be considered.
The price is in line with the EMA (48). The medium-term trend is sideways, ergo, it is possible to open both buy and sell orders.
4. Analysis of the short-term trend.
A short-term trend that can show the point of entry into the market well is a trend on the H1 timeframe. We will be helped by EMA (48) - an exponential moving average with a period of 48. If the H1 candlestick closes above the EMA (48), then the trend is upward and you should consider opening long positions. If the H1 candlestick closes below the EMA (48), then the trend is downward and you should consider opening short positions.
The price is below the EMA (48). The short-term trend is downward. Thus, you can consider opening short positions. Long-term, medium-term, and short-term trends do not coincide.
5. Japanese candlestick analysis.
Classic Japanese candlestick analysis is applied to the daily timeframe. In this analysis, we will also analyze the daily candle.
The daily candlestick has closed downward, the candlestick is black. Its high is above the high of the previous candlestick. Candlestick configuration - Inner candlestick, no large body, no large shadows. According to the candlestick analysis, it is possible to open short positions.
6. Conclusions.
- Volume analysis - BUY SELL.
- Long-term trend - SELL.
- Medium-term trend - BUY SELL.
- Short-term trend - SELL.
- Japanese candlestick analysis - SELL.
General conclusion: On May 28, you can both open long and short positions, since different types of analysis give different forecasts.
7. Statistics.
To analyze the effectiveness of this approach, statistics are kept on completed transactions. Forecasts and transactions are made for four instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. The yield is 10.4% in 3 months with a maximum drawdown of 4.88%. Statement:
I do not open new deals on Litecoin if there is uncertainty in the market.
The risk per transaction is 1% of the deposit. For new trades, the stop loss is located behind the daily extreme point. We do not set a take profit, as we will accompany the transaction by moving the stop loss beyond the extreme points of the upcoming sessions.
Since trading is conducted on daily charts, this recommendation is relevant throughout the day.
Trade along the trend, and you will gain profits!
