In the cryptocurrency market, if you want to understand how to earn your first 1 million, conducting in-depth research and study of candlesticks is key.
Many people frequently fall into traps in the cryptocurrency market, the root cause of which is solely focusing on a single cycle for trading. Here, I will introduce the commonly used multi-cycle candlestick trading method, which mainly consists of three steps: grasping the direction, finding points, and timing.
One, 4-hour candlesticks: clarify the overall direction for going long or short.
The 4-hour candlestick cycle is relatively long, which can filter out short-term interfering factors and clearly present the price trend.
• Upward trend: When highs and lows are rising in sync, it is advisable to adopt a strategy of buying on pullbacks.
• Downward trend: If highs and lows are declining in sync, it is more appropriate to short when the price rebounds.
• Sideways trend: The price fluctuates repeatedly within a certain range, and frequent trading at this time can easily lead to mistakes, so it is not recommended to trade.
It is essential to remember that operating in the direction of the trend has the possibility of winning, while going against the trend will only result in losses.
Two, 1-hour candlesticks: used to delineate ranges and find key positions.
After determining the major trend, the 1-hour candlestick chart can help find support and resistance levels.
• Potential entry points: When the price approaches trend lines, moving averages, previous lows, etc., these points represent potential entry opportunities.
• Timing for taking profit or reducing positions: When the price approaches previous highs, important resistance levels, or when a topping pattern appears, one should consider taking profits or appropriately reducing positions.
Three, 15-minute candlesticks: responsible for determining the final entry timing.
This cycle is specifically used to find the specific timing for entry, not for judging trends.
• Grasping entry signals: Wait until a key price level shows a small cycle reversal signal, such as engulfing patterns, bottom divergence, golden crosses, etc., before taking action.
• Confirming the validity of the breakout: At the same time, a breakout accompanied by increased trading volume is more reliable; otherwise, false breakouts can easily occur.
Multi-cycle coordination method.
1. Determine the direction: First, use the 4-hour chart to decide whether to go long or short.
2. Identify the entry area: Next, use the 1-hour chart to define the support or resistance area.
3. Precise entry: Finally, look for the trading signal for the final push through the 15-minute chart.
In addition, there are a few more points to clarify:
• Cycle conflict handling: If the directions shown by several cycles conflict with each other, it is better to choose to stay out of the market and wait, and never engage in trading without confidence.
• Setting stop losses: Due to the rapid fluctuations in small cycles, it is essential to set stop losses to prevent repeated losses.
• Comprehensive application principle: Combining trend, position, and timing appropriately is much more effective than blindly staring at charts and guessing market movements.
This multi-cycle candlestick trading method has been verified by my years of use and is a fundamental method for achieving stable profits. Whether this method can be used well depends on whether one is willing to observe charts more and summarize and generalize.