Step 3 — Check The Charts

Technical indicators represent one part of the medal. However, adding another perspective to your trade setup is essential: The chart.

Similar to the initial Bitcoin check, we are particularly interested in two aspects: the current trend and support and resistance areas.

Trend

There’s a well-worn phrase: The trend is your friend. Nevertheless, the trend is probably the most critical attribute to incorporate in your trade setup.

• You want to trade the trend. That means, for example, if you consider trading a long signal, the asset has to be in a clear uptrend. If the asset is in a downtrend, it is a no-go. Of course, it is possible that such a trade works out, but the risk is simply too high.
• You want to trade trend outbreaks: Assets breaking out of a trend that goes against your trade signal are also valid. Let’s assume you have a solid long signal. The signal has been in a considerable downtrend but broke through the trend line.

Support & Resistance

This part is straightforward and assumes you are aware of defining support and resistance areas.

1. In terms of Long trades, you want to go for assets where:
1. the price has bounced from a support area OR
2. the price broke through a resistance area OR
3. the price sits well between support and resistance, AND
4. there’s enough “room” for the next resistance area.
2. In terms of Short trades, you want to go for assets where:
1. the price was rejected at a resistance area OR
2. the price fell through a support area OR
3. the price sits well between support and resistance, AND
4. there’s enough “room” for the next support area.

Table of Contents

• Step 3 — Check The Charts
• Trend
• Support & Resistance
• Checklist & Material
• Checklist
• Documentation Template

Sub Pages