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1. Analysis of BCH/USD volume from Binance cryptocurrency exchange

2. Analysis of long-term trend

3. Analysis of medium-term trend

4. Analysis of short-term trend

5. Japanese candlestick analysis

6. Conclusions

7. Statistics

1. Analysis of BCH/USD volume from Binance cryptocurrency exchange

The analysis is based on the horizontal volumes data on daily charts from the Binance exchange. The analysis is carried out based on the footprint-profile theory. According to the theory, the direction of the level with the highest trade volume within a day can indicate the likely direction of the trend. The highest trade volume is the level with the largest number of transactions carried out. That is, it is the level of major market players. Accordingly, if the highest trade volume level goes up, it indicates an upward trend. Otherwise, if the highest trade volume level goes down, it indicates a downward trend. Chaotic movements signal that the market is trading flat.

09.02.21 – the highest horizontal volume level; point of control (POC) = 485.12

10.02.21 – the highest horizontal volume level; point of control (POC) = 489.69

The point of control moved up. Meanwhile, the price level is above POC. The upward trend continues. Therefore, one can open long positions.

2. Analysis of long-term trend

A trend is the trader’s friend. Many traders know this saying but do not know how to use it. The answer is simple: to trade only in the direction of a trend. Thus, your trades will have more profit potential with less risk. According to the classic Dow theory, there are three main trends:

long-term

medium-term

short-term

These are the trends you should analyze before entering the market. Now, we are going to discuss them.

The long-term trend is the daily trend. In this case, deals are made in the daily time frame and are held for several days. The analysis of the daily trend is made with the help of the 48-period exponential moving average (EMA). If the daily candlestick closes above EMA(48), it will indicate the upward trend. Therefore, you should enter long. If the daily candlestick closes below EMA(48), then it is the downward trend and you should enter short.

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According to the chart, it is the upward trend as the price level is above EMA(48). That is why you should consider entering long.

3. Analysis of medium-term trend

The medium-term trend is the trend on the 4-hour chart (H4). In this case, we will also turn to EMA(48). If the candlestick closes above EMA(48) on the 4-hour chart, it will indicate the upward trend. Thus, you should enter long. Otherwise, if the candlestick closes below EMA(48) on the H4 chart, it will indicate the downward trend. Consequently, you should enter short.analytics602522db71699.jpg

The price level if above EMA(48). This means that the medium-term trend is the upward trend. Apart from that, it coincides with the long-term trend. Therefore, you should open long positions.

4. Analysis of short-term trend

A short-term trend is the trend in the H1 time frame. Moreover, it can show an entry point into the market well. We will turn to EMA(48) again. If the candlestick closes above EMA(48) on the H1 chart, it will indicate the upward trend. Thus, you should enter long. Alternatively, if the candlestick closes below EMA(48), it will indicate the downward trend. Consequently, you should enter short.

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The price level if above EMA(48). It is the short-term upward trend. The long-term, the medium-term, and the short-term trend coincide. Thus, you should open buy deals.

5. Japanese candlestick analysis

A classic Japanese candlestick analysis is applied to the daily timeframe. In this particular analysis, we will also look at the daily candlestick.analytics6025231092843.jpg

Thus, we have a black downward daily candlestick. Its extreme highs are above the high of the previous candlestick. The candlestick has an unclear shape. Its body is inside the body of the previous candlestick. The movement inside a corridor is highly likely.

6. Conclusion

Volume analysis: POC moved up; buy deals are a priority.

Long-term trend is upward –> BUY.

Medium-term trend is upward –> BUY.

Short-term trend is upward –> BUY.

Japanese candlestick analysis –> BUY SELL.

General conclusion: one can both sell and buy the instrument.

7. Statistics

To analyze how effective this approach is, the data on completed transactions is tracked. Trading account monitoring:

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February 2021: +3%.

Current deals:

03.02.21 BCH/USD BUY: 441.26; SL: 466.21; Risk per deal: 1% of a $10,000 deposit with 2.7 lots.

A Stop Loss should be placed above the daily extreme points when you open new deals. You do not need to set a Take Profit because we are going to move the Stop Loss above the extreme points of the upcoming sessions.

Since trading is carried out on daily charts, this recommendation is relevant throughout the day.

Trade with the trend and you will generate profits!

The material has been provided by InstaForex Company – www.instaforex.com

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