In the cryptocurrency market, short-term trading is the first choice for many investors. However, despite the large number of participants, there are not many who can make a profit. The reason is that short-term market fluctuations are rapid, and if one cannot grasp the necessary technical indicators and use them reasonably in practice, it is difficult to achieve ideal returns in short-term operations.
Today, the speaker will share how to effectively apply short-term technical indicators to enhance the success rate of short-term trading.
First: Pay attention to trading volume patterns
Changes in trading volume can provide important clues about market trends. When trading volume shrinks, it usually means that both buyers and sellers lack confidence in future trends, leading to a decrease in market activity. This situation can be divided into two categories:
1. Market Pessimism: If most investors have a pessimistic view of future trends and sell without buyers stepping in, the market will experience a sharp decrease in volume.
2. Market Optimism: Conversely, if everyone generally has a positive outlook and investors actively buy but no one sells, it will also lead to a sharp decrease in trading volume.
Usually indicates that a trend change is happening in the market. At this time, both bulls and bears have significant disagreement about the future direction, and trading is active. Investors should closely monitor the next fluctuations to judge which side may prevail and act accordingly.
Second: Observe the changes in trend patterns
Apart from trading volume, investors should also pay attention to pattern changes. Several important patterns are as follows: W-bottom, head and shoulders bottom+, rounded bottom, ascending channel, etc. When these patterns break through the upper neck line, it can be seen as a buy signal, but the following two points should be noted:
1. Valid Breakthrough: Confirm that the breakthrough is not a false breakout.
2. Low-level Breakthrough is More Reliable: A breakthrough at a low level is relatively reliable, while a high-level breakthrough may be a “trap” set by the market maker to guide market sentiment for selling purposes.
A prudent operation should usually wait for the breakthrough of the neck line, observe the market's pullback situation, and then consider the timing for entry.
Third: Use of Moving Average Trends
Short-term traders generally use five-day, ten-day, and thirty-day moving averages. Key signals include:
Golden Cross+: When the five-day moving average crosses above the ten-day moving average+, it is usually seen as a buy signal.
Death Cross: Conversely, when the five-day moving average crosses below the ten-day moving average, it is a sell signal.
Additionally, if the three moving averages show an upward trend, it indicates that the market is bullish, and investors can consider building positions during pullbacks. Conversely, if the moving averages trend downward, one should follow the trend and consider shorting.
Fourth: Use of Technical Indicators. There are many technical indicators in the market, and investors do not need to be well-versed in all of them; being familiar with a few commonly used indicators is sufficient. Two commonly used indicators are Stoch and RSI:
Stoch Indicator: When the K value crosses above the D value twice at a low level (around 20%), it is usually a good buying opportunity; when it crosses below the D value twice at a high level (above 80%), forming a death cross, it is a selling opportunity.
RSI Indicator: When the RSI value is between 0-20, it indicates that the cryptocurrency is oversold, which is a buy signal; when it is between 80-100, it indicates overbought+, which is a sell signal. It should be noted that technical indicators have lagging characteristics and cannot be used alone as the basis for trading decisions.
Some strong cryptocurrencies at high indicator levels
Some strong cryptocurrencies may continue to rise, while some weak cryptocurrencies may continue to fall even at low indicator levels. Therefore, when using technical indicators, be sure to consider other factors comprehensively.
Conclusion
The current market trend is highly volatile, with frequent changes. Therefore, it is recommended that investors adopt a quick in-and-out strategy and set stop-loss levels, with specific values depending on individual circumstances. If there are changes in the short-term market, be sure to decisively stop-loss to avoid greater losses. For
In short-term operations, any price fluctuation can be a potential opportunity, but the premise is to ensure the safety of the principal; otherwise, it is very difficult to achieve profit opportunities.
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