The content in this blog should not be considered as financial advice, but rather as a personal opinion.
Why Price Action is Crucial for Successful Crypto Trading
In the fast-paced world of crypto trading, understanding price action is crucial for making informed decisions and maximizing profits. Unlike relying solely on technical indicators, price action allows traders to analyze market movements in real time, offering a clearer picture of supply and demand dynamics. Whether you’re a beginner or an experienced trader, mastering price action can give you an edge in navigating the often volatile crypto markets. In this post, we’ll explore the key principles of price action, break down essential trading strategies, and show you how to apply them effectively in your crypto trading journey.
Table of Content
CCW VIDEO LIBRARY – PRICE ACTION
Bullish Candle
A bullish candlestick pattern is one that signals a coming uptrend in an asset’s price or a continuation of said uptrend.
Each candlestick visually represents the open, close, low and high price during a certain time frame.
Bearish Candle
A bearish candlestick is a visual representation of price movement on a chart that suggests a potential downward trend or price decline in an asset.
It’s formed by the arrangement of the candle’s open, close, high, and low.
2.1 How to read Candlestick charts?
This are the most important considerations I have before taking a position.
PA of the coin, Size of the body of the candles, patterns, timeframes…
Entry confirmation
Here are some of the best confirmations to consider before entering a trade:
- TA Indicators: MACD, RSI, Stochastic…
- Support and Resistance
- Trend Confirmation
- Candlestick Patterns
- Fundamental and Volume Analysis
3.1 Entry confirmation
Long Setup: A valid confirmation candle will close above the body of the previous candle as well as in it’s upper 1/3rd
A valid confirmation candle must close above the body of the previous candle in a LONG setup
Entry confirmation
The entry in this example would be the following:
Wait for the price to make a “Stop Run” below support
Wait for a bullish candlesticks that engulfs in body the previous candles
Wait for the bearish wick retest at the open of the bullish candle
Entry.
4.Market Structure
How to identify “Market Structure”:
- Mark the FVG’s in HTF
- Mark the Lower Low of the structure
- The FVG’s are Resistance
- The Lower Low should act as Support
- Identify ALWAYS the MS in HTF
Market Structure part 2
How to trade based on Market Structure:
Before entering on a trade, ALWAYS check his MS, preferably on 4H-1D
You will identify if we are in an uptrend or downtrend.
Follow the trend, until it ends.
5. Market Structure Shift
This occurs when price moves beyond an old level of structure and quickly reverses with displacement.
Displacement indicates that the market is reversing and involves significant participation from large players.
In the image provided you can see a schematic of a bearish shift in market structure.
Price takes a short term high and traded into a point of interest which is mapped out as the green shaded area.
There’s a SHIFT in the MS after touching the POI
In this image, price traded into a point of interest in a premium area.
Price should reverse in the POI, and make a Market Structure Shift.
The point of interest in this case is a 1 hour FVG.
6. CISD
A change in the state of delivery occurs when bullish momentum suddenly shifts to bearish, or vice versa.
Signaling a potential market reversal.
CISD is used to identify potential changes in market direction by analysing the closing price relative to the opening price of up candles.
It offers an early entry point compared to other confirmation methods.
6. FVG’s and Liquidity Sweeps
This is the formation of a BULLISH and BEARISH FVG.
You need to understand why FVG’s are formed and where to trade them.
6.1 FVG’s and Liquidity Sweeps
The term ‘liquidity sweep’ refers to the clearing of resting orders like a broom sweeping through an area
These sweeps are deliberately initiated by institutional players to ‘hunt’ for SL orders and fill their large orders at better prices
7. Draw on Liquidity
Drawing on liquidity means executing trades by utilizing the available liquidity in the market.
This is done by tapping into multiple liquidity providers to execute trades.
Post Credits
Thanks to CryptoSoulz for all the trading information