10 min
Step 1 — Assess The Market Trend
As a first step, Crypto OS Orbitals assesses the market to determine whether it makes sense to trade right now.
Assessing the market includes two angles: Determining the trend and analyzing the news.
Bitcoin Chart For Trend Analysis
Except for rare occasions, Bitcoin highly influences and represents the crypto market. If Bitcoin trades sideways, the rest of the market trades sideways. Similarly, if Bitcoin pumps or dumps, the rest of the market follows. However, the magnitude is usually much higher when it comes to altcoins. So, when, for example, Bitcoin pumps 3%, many altcoins pump 10% or more.
Therefore, we can use the Bitcoin chart to understand the current trend. Many traders simply use a price average (e.g., EMA200) to define the trend. However, I don’t consider this helpful. First of all, this approach does not consider a sideways market, and secondly, it lacks.
From my perspective, it is much better to analyze the high-level trend by looking at the chart. Of course, a moving average can help, but it shouldn’t be the sole criterion.
Overall, you want to discover two aspects: The price range or trending and whether the price is close to a support/resistance level. Based on that, the following matrix helps you to determine if it is time to trade quickly:
Trend | Approaching Resistance | Approaching Support | Time To Trade |
Uptrend | No | - | YES |
Uptrend | Yes | - | NO |
Sideways | - | - | NO |
Downtrend | - | Yes | NO |
Downtrend | - | No | YES |
As you can see, only two constellations allow us to trade. Especially on higher timeframes, such as the daily chart, this inevitably leads to situations where you can’t trade for days, sometimes weeks. However, it is important not to get impatient. You always want to wait for the right market conditions
Market News
Besides the market news, you have to check the upcoming news of the day. In case of significant announcements, you should avoid trading. Think about the announcement of U.S. inflation rates, FED meetings, or other impactful news. This news usually drives strong volatility and adds additional risk to your trades. Moreover, it adds another factor that is entirely out of your control. And we want to avoid both: Things we can’t control and things that add risks.
Checklist & Material
Checklist
Bitcoin Trend Analysis Allows Trading? | |
Market News Allow Trading? | |
Documentation Completed? | |
Continue To Steps 2? |