Cryptocurrency Analysis

[IFX_Selena]

Forecast for BCHUSD on February 3, 2021 - BUY



1. Analysis of bitcoin futures volumes from the Chicago Futures Exchange (CME).

Since bitcoin is the flagship of the cryptocurrency market, we will first analyze its movement. The analysis uses data on horizontal volumes from the Chicago Futures Exchange on daily charts. The analysis is based on the "Footprint Profile" theory, in which the movement of the maximum volume level for the 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 displacement of the maximum amount of levels up indicates an upward trend. Moving the maximum volume level down indicates a downward trend. The chaotic movement of the maximum volume levels indicates a flat in the market.

01.02.21 – maximum horizontal volume level (POC - Point Of Control) - 33975
02.02.21 – maximum horizontal volume level (POC - Point Of Control) - 34580

The POC moved up, the price reaction after the infusion of this volume - up. There is a possibility of continuing the upward movement.


2. Analysis of the long-term trend.

A trend is a trader's friend. Many traders know this saying, but do not 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 the classical Dow theory, there are three main trends:

-long-term;
-medium-term;
-short-term.

It is all these trends that need to be analyzed before opening any transaction. In this analysis, we will do this.

The long-term trend in this analysis is the daily trend. Trades will be made on a daily timeframe and held for several days. The daily trend is analyzed using the EMA (48), an exponential moving average with a period of 48. If the daily candle closes above the EMA (48), it means that we are facing an upward trend and should buy. If the daily candle closed below the EMA (48), it means that the trend is downward and should be sold.



The chart shows the beginning of an uptrend, the price is higher than the EMA (48), so in this situation, it is worth considering only purchases.

3. Analysis of the medium-term trend.

In this analysis, the medium-term trend will be the trend on the 4-hour chart (H4). Also, the analysis will use the EMA (48) - an exponential moving average with a period of 48. If the H4 candle closed above the EMA (48), then the trend is upward and you should buy. If the H4 candle closed below the EMA (48), it means that the trend is downward and should be sold.



Several H4 candles closed above the EMA(48) and are holding higher. This means that the medium-term trend is upward and coincides with the long-term trend, so you should buy.


4. Short-term trend analysis.

The short-term trend, which can well show the entry point to the market, will be considered a trend on the H1 timeframe. The EMA (48), an exponential moving average with a period of 48, will help us. If the H1 candle closed above the EMA(48), it means that the trend is upward and you should buy. If the H1 candle closed below the EMA(48), it means that the trend is downward and should be sold.



The price is confidently above the EMA(48). Strong upward trend; long-term, medium-term and short-term trends are the same, you should buy.


5. Japanese candle analysis.

The classic Japanese candlestick analysis is used for the daily timeframe. In this analysis, we will also analyze the daily candle.



Closing yesterday's daily candle up, the candle is white. Extremes inside the previous candle, which indicates the weakness of the "bulls" pushing prices up. There is no obvious candle configuration, however, there is a growing white candle showing a possible continuation of the upward movement.


6. Conclusions.

Volume analysis: POC moved up, the price reaction is up - BUY.
Long-term trend: up - BUY.
Medium-term trend: up - BUY.
Short-term trend: up - BUY.
Japanese candlestick analysis - BUY.
General conclusion: 03.02.21 - it is preferable to buy.


7. Statistics.

To analyze the effectiveness of this approach, it is necessary to keep statistics on completed transactions. Opening a purchase transaction:

03.02.21 BCHUSD BUY: 150.70; SL: 129.63; the risk of the transaction:1% of the deposit. With a deposit of $ 10,000, lot 2.7

The stop loss is located behind the daily extreme. We do not set a take profit, as we will accompany the transaction by moving the stop loss beyond the extremes of the new days. Since trading is conducted on daily charts, this recommendation is relevant throughout the day.




Maxim Petrov
Analytical expert
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