In large numbers, Cryptocurrency traders (who have been conditioned by the existing (old) and failed trading paradigm), have used only just a fraction of the reality of Daily, Weekly and Monthly Levels in their trading. Here you will learn valuable information and a technique regarding these levels in conjunction with the Fixed Price Volume Profile Tool. Combined, they provide an arsenal of trading resources which when implemented, can truly transform a trader’s technical chart skills.
When I was first introduced to trading cryptocurrencies, I didn’t have a clue where to start. I was naïve and confused as one could be. But, I was driven and really wanted to learn. Every time, I would look at a chart, I would see candles going up and going down, bouncing at certain levels and getting rejected at other levels. I was driven to find where, why and how each level was acting as support and resistance. Only to find by watching YouTube traders and taking part in group chats within untrustworthy apps, my hunger for where to start wasn’t being quenched. I needed something basic and simple to understand. So I set out on a venture to study as many trading strategies as possible, in a sort of skim reading phase which spanned over a couple of years. None of which showed me a way to start looking at a fresh chart. Most were using lagging indicators to show them what was happening, however little to their knowledge, they had no idea to what was actually going on in the charts.
Today, I wish to share a simple but effective Bitcoin trading strategy for beginners still used by us here at Cryptovimto when we start to analyse a chart. In no way is this the only strategy we use, however, it is the very first step we take before diving deeper using far more advanced tools and resources.
So without wasting any more of your time, please follow the example and strategy below and implement it in your own strategy to enhance your profits.
Let’s start with the most commonly known asset amongst cryptocurrencies. Bitcoin (BTC) on the Bybit Exhcange. Using Tradingview as the Chart Analysis software, which is free to use online and as an application. On the monthly timeframe. We always start with the Monthly and then work our way down to the lower timeframes.
Many traders use wicks to mark out every single one of their levels however, when it comes to marking out Daily, Weekly and Monthly levels, it’s important to use the close of the candles. You’ll come to notice how important these levels are when it comes to trading, even the old levels set days, weeks, months and years in advance. The candles that you would use as levels are where 2 candles bottom or top are next to each other in perfect sync, rather than separated. Daily Levels would be found on the daily timeframe on the chart, Weekly Levels on the weekly timeframe and the Monthly Levels on the monthly timeframe.
As you can see, we only have one Monthly Level at $58822 that we can use as a major resistance level. It’s proven to be a massive resistance on the chart for BTC in 2021. A huge resistance to beat. There is a current untapped Monthly Level at $6424 which was formed in March 2020.
If we look back a little bit more on the Coinbase chart, there is an old Monthly Level at $13863 the was formed in December 2017 and then back tested 2 years later in the summer of June 2019. The price action then broke through in November 2020.
Now that we’ve seen the Monthly Levels, we can see the massive move that has happened recently, so now we can move in to the Weekly Levels and zone into the more recent events. Even though we’ll be covering previous Weekly Levels, you’ll notice how they come back into play. Let’s add the Weekly Levels to our fresh chart. Ignoring the upper Weekly Levels let’s focus on the downside as we’re currently in that range again.
Even though it’s an old Weekly Level you can see how the lower Weekly Level at £32290 is holding as support which we have already back tested recently. With these 2 Key Weekly Levels you may have noticed that the price action was range bound between the two which lasted the whole of January 2021. You can now notice that we closed the Weekly candle above the upper Weekly Level acting as resistance and then back tested it the week after using it as a Key Weekly Support Level now. It immediately took off to the upper range of the Bull run.
let’s see how the Price action bounced around within this previous weekly range, so let’s zone in a little more and head over to the Daily chart.
Price action failed to go any higher so came back into range bouncing around several times within it. Clearly defining where to go long and where to go short, or to buy and sell.
Please note, there was a January high Level above the Weekly Levels so we’ve marked that out too as it’s an interesting level within the recent events and also a recent Daily Level which has been formed recently as seen in the pic below. This recent Daily Level just so happens to be in line with the Daily Level from January. So, we have an old Daily Level of Resistance acting as a new Daily Level of Resistance.
As a range has been built for the recent events and the range itself may not look so large, but if you actually measure it, you’ll notice that it’s in fact a measured move of around 25% between the Weekly Support Level and the Daily Level. Again, giving you a clear distinction of when to short and when to long. With these Horizontal Key Levels, you will make informed decisions when entering or exiting a trade. You’ll no longer be longing in the resistance levels and shorting in the support levels. In turn this will reduce your losses massively. For anyone who have longed from the Weekly Level will most likely be taking profits at the Daily Level which just so happens to be the Daily Level from back in January, so it’s a very important level to be keeping an eye on. Moving on to the lower time frame of 1 Hour, let’s see if the Weekly Levels and the Daily Levels play any significant role in our basic trading strategy:
As you can see from the pic above, the old Weekly Levels and the daily Levels have been respected and so one can assume we’re currently in a “Range” between the older Weekly Level acting as support and as the January High wasn’t taken out, the Daily Level acting as a resistance Level. One could say if you were “Long” from the bottom Weekly Level, the Daily Level would have been a major take profit level as we understood the Daily Level was of importance since it was an old Daily Level from January turned into a new Daily Level of resistance.
Now that we’ve got our Horizontal Levels set adding on any other Daily, Weekly Monthly Levels in the recent range (Which so happens, we have a Daily Support Level), we can zone in a little more to find the ultimate range. We can do this by using the Fixed Range Volume Profile, which will pull data from the candles selected and show you the Value Areas where the most trades where placed based on a horizontal scale. Ensure the setting for the tool is set to Ticks Per Row. Let’s do this on the 1 Hour timeframe. Starting from the candle underneath the January High (around the $42000 mark) and ending all the way to the recent candle:
The FRVP shows us where 70% of the activity is taking place. From this we learn where the current Support and Resistance Levels are. In this current case the Value Area from the FRVP shows us that the range is between the two Daily Levels we have set. Of course, the Price Action can go over and below the range over time, however, this is how you would approach the Cryptovimto Strategy for longs and shorts.
Please bare in mind, these are the Key steps to take prior to any further technical analysis. With these steps they will enhance your profits by showing you clear areas of support and resistance, as well as where not to short and where not to long. Use these at the start of your T.A. to compliment further T.A. such as the use of the Fibonacci retracement tool, Fibonacci Trend Based Extension tool, Pitchfork tool, Harmonic patterns, Elliot waves etc.