No matter what investment, we should not rely too much on indicators, but the basics still need to be grasped.
After all, every indicator has its limitations and lagging characteristics, so it is best to use multiple indicators together.
Combining information from various sources, especially in the cryptocurrency market where factors like market manipulation by large players are involved, indicators can be relatively more complex.
Wave trading indicators are divided into three main categories: oscillating, trend, and energy indicators.
Oscillating indicators can display the overbought and oversold conditions of local prices in K-lines +, providing qualitative positioning for layout prices.
It is more suitable for short-term operations, with representative indicators being KDJ and RSI. For those with no basic knowledge, you must first read the articles.
Clarify the meaning and use of each indicator.
Trend indicators + can define trends over a period of time and linearize price fluctuations, a representative example is
MACD, MA.
Generally speaking:
The Golden Cross and Dead Cross on a 15-minute chart + can predict trends for half a day;
The Golden Cross and Dead Cross on a 30-minute chart can predict trends for one day;
The Golden Cross and Dead Cross on a 60-minute chart can predict trends for two days;
In general, the smaller the cycle selected, the more precise the buy and sell price levels.
Energy indicators are derived from volume data, with VOL being the most common.
VOL consists of volume bars and moving averages. If the closing price for the day is higher than or equal to the previous day's closing price, the volume bar is colored red; otherwise, the volume bar
Appears green. Using VOL can provide a more intuitive view of the relationship between volume and price.
A relatively basic usage.
Golden Cross and Dead Cross
(1) Golden Cross
A MACD Golden Cross is formed when the DIF line (white line) crosses above the DEA line + (yellow line) and the DIF must be above the DEA while moving upward.
Movement. At this time, the bulls have the upper hand; a MACD Golden Cross is a very good buying signal for the medium to long term, but if the Golden Cross occurs while the DIF line + and
The DEA line is below the zero axis, indicating that although the bulls currently have the upper hand, caution is needed to prevent a rebound.
(2) Dead Cross
A MACD Dead Cross is formed when the DEA line (yellow line) crosses below the DIF line (white line) and the DIF must be below the DEA while moving downward.
At this time, the bears have the upper hand; a MACD Dead Cross is a very good selling signal for the medium to long term. If a Dead Cross occurs above the zero axis, there are two scenarios:
It may be a temporary pullback followed by a continued rise, or it may be the beginning of a major pullback.
Top divergence and bottom divergence +
Divergence literally means deviating from the predetermined, normal track. In the cryptocurrency market, it refers to when the price of the cryptocurrency is in an upward or downward trend, and the technical indicators
When indicators move down or up while technical indicators do not follow price changes, it is called a divergence.
Essentially, this is due to certain reasons causing the price and indicators to show different trends, resulting in the indicators not being able to synchronize with the price.
Divergence is divided into two types: top divergence and bottom divergence.
Top divergence refers to a situation where the price of a cryptocurrency continues to rise, but the MACD technical indicator's graph is composed of red bars showing lower peaks, which is called top divergence. At this time, the bearish forces strengthen, which is a good signal to escape the peak.
Bottom divergence refers to a situation where the price of a cryptocurrency continues to fall, but the MACD technical indicator's DIF line declines less than the price, or even rises, which is called bottom divergence.
This indicates that the bullish forces are strengthening, which is a good signal for bottom fishing.
PS: The DEA line will be more accurate, but it requires a longer cycle and the process will be slower.
(1) RSI Indicator +
The theory of strength and weakness indicators suggests that any significant price increase or decrease in the market fluctuates between 0-100. Based on normal distribution, it is believed that the RSI value typically remains
Fluctuating between 30-70, usually when it reaches 80 or even 90, it is considered that the market has reached an overbought state; this value may increase in the cryptocurrency market.
At this point, the market price will naturally decline for adjustment. When the RSI value drops below 30, it is considered an oversold state, and the market price will experience a rebound.
Rise.
(2) KDJ Indicator
K value below 20 and D value below 30 is considered an oversold area. Generally, the price of the cryptocurrency may rise, increasing the possibility of a rebound, and can be considered for entry.
Entry point. When K value is above 80, D value above 70, and J value greater than 90, this is considered overbought. Generally, the price of the cryptocurrency may decline, and caution is advised.
Sell at the highest point.
Insights on wave trading
In fact, trading waves is not that complicated. In summary, it is about entering at low points and exiting at high points, comprehensive analysis using multiple indicators, and paying attention to take-profit and stop-loss.
Do not operate frequently or use large positions; controlling risk is sufficient.
For retail investors, the most challenging points are the buying and selling points.
In fact, judging entry points is not particularly difficult; there are many messages that everyone knows, such as Litecoin + halving. However, many retail investors want the lowest point.
Buy at the lowest point, sell at the highest point, fearing being stuck or cut off, and worrying about being thrown off the train; the key is greed, always thinking that the price can wait a bit longer before pulling back.
Therefore, when trading in waves, the first step is to clearly see the market trend. Recognize whether it is a bull market or a bear market, and whether the market is in an upward or downward trend.
Next, you need to confirm the risk and return ratio of the cryptocurrency you want to buy, and finally understand whether you are operating on a large wave, medium wave, or small wave. Have a positioning in your mind for the take-profit timing and price range.
In fact, judging entry points is not particularly difficult; there are many messages that everyone knows, such as Litecoin + halving. However, many retail investors want the lowest point.
Buy at the lowest point, sell at the highest point, fearing being stuck or cut off, and worrying about being thrown off the train; the key is greed, always thinking that the price can wait a bit longer before pulling back.
Therefore, when trading in waves, the first step is to clearly see the market trend. Recognize whether it is a bull market or a bear market, and whether the market is in an upward or downward trend.
Next, you need to confirm the risk and return ratio of the cryptocurrency you want to buy, and finally understand whether you are operating on a large wave, medium wave, or small wave.
Have a positioning in your mind for the take-profit timing and price range.
The biggest taboo in trading waves is greed; being greedy can easily cause you to miss the best take-profit range.
Do not eat the fish head, do not eat the fish tail, do not seek to buy at the lowest point, and do not wait to sell at the highest point.
Doing this has the disadvantage of not maximizing profits, as sometimes it will let the big fish escape, leaving many regrets; the advantage is that the risk coefficient is relatively low and safe.
The coefficient is high; maintain a winning mindset and always be proactive.
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