On the chart of BTCUSD, I have incorporated 3 robust indicators on a daily chart that illustrate ideal long and short positions. The signals are not 100% accurate, but considering that chart analysis and entry/exit positioning is not a science, the signal that the three indicators produce is quite robust.
The chart above shows that there have been quite a few trade opportunities in the last 6 months for both long and short positions. Also, the position time held is usually less than a month, sometimes only a couple of weeks. As such, the opportunities to trade are quite frequent, especially so on a daily chart scale.
The Indicators:
(All the indicators work within a daily chart time frame)
Commodity Channel Index (CCI) on 25 length, OHLC/4
Stochastic at default settings
STOCH (14,3,3)
Relative Strength Index at 10 length, OHLC/4
RSI (10,OHLC4)
The Signal:
BUY:
For a buy signal, all indicators must show a cross above the lower channel line. Once this has taken place, the equivalent Bitcoin price where the cross over has occurred should be entered in a long position. Place the stop loss (SL) slightly below the most recent lower low. Take Profits (TP) is harder to plot as we do not know exactly were it will land. My best advice would be to set up a notification when CCI has crossed above the top channel as it tells you to close the position soon.
Refer to the chart and look closely at the green vertical line that highlights the long position.
SELL:
Inverse to above.
CCI, STOCH and RSI should cross under the top channel line. Stop losses placed above the higher highs and take profits can be usually placed at similar lower low levels or even better use fibonacci key levels.
Don't forget that while overlays and indicators are useful, trend analysis and chart patterns will be more insightful if it is combined with chart drawings such as support, resistance lines, triangle formations and of course Elliot wave sequences.
This is an update on my previous post that a user has flagged that the entry and exit positions were not accurate enough. This is a clear refinement on the strategy and seems to be a lot more precise and accurate.
19/10/18
The chart above shows that there have been quite a few trade opportunities in the last 6 months for both long and short positions. Also, the position time held is usually less than a month, sometimes only a couple of weeks. As such, the opportunities to trade are quite frequent, especially so on a daily chart scale.
The Indicators:
(All the indicators work within a daily chart time frame)
Commodity Channel Index (CCI) on 25 length, OHLC/4
Stochastic at default settings
STOCH (14,3,3)
Relative Strength Index at 10 length, OHLC/4
RSI (10,OHLC4)
The Signal:
BUY:
For a buy signal, all indicators must show a cross above the lower channel line. Once this has taken place, the equivalent Bitcoin price where the cross over has occurred should be entered in a long position. Place the stop loss (SL) slightly below the most recent lower low. Take Profits (TP) is harder to plot as we do not know exactly were it will land. My best advice would be to set up a notification when CCI has crossed above the top channel as it tells you to close the position soon.
Refer to the chart and look closely at the green vertical line that highlights the long position.
SELL:
Inverse to above.
CCI, STOCH and RSI should cross under the top channel line. Stop losses placed above the higher highs and take profits can be usually placed at similar lower low levels or even better use fibonacci key levels.
Don't forget that while overlays and indicators are useful, trend analysis and chart patterns will be more insightful if it is combined with chart drawings such as support, resistance lines, triangle formations and of course Elliot wave sequences.
This is an update on my previous post that a user has flagged that the entry and exit positions were not accurate enough. This is a clear refinement on the strategy and seems to be a lot more precise and accurate.
19/10/18
Comment:
Please be aware I am aware of the larger trend and specifically the tightening triangle pattern or descending wedge pattern. However, the purpose of my analysis is to point to short term trade executions (or perhaps even a good initial entry into the market. It is not indicative of anything else except for producing trade signals.
