Technical Analysis with Indicators

Technical Analysis with Indicators

Technical analysis with Indicators helps guide traders to what is most likely to happen given past information. Remember, an indicator is exactly that, an indication of what might happen; it is NO guarantee.

Trading indicators are mathematical calculations plotted as lines on a price chart and help traders identify certain signals and trends within the market. There are leading and lagging indicators, but all use price action.

Price action must come first to calculate the indicator. An example of this is the simple moving average which is calculated from the price. It is a backward-looking indicator and relies on past price data for a certain period. The moving average is calculated by adding a coins prices over a certain period and dividing the sum by the total number of periods.

I only use technical analysis and a few simple indicators to trade crypto successfully. Let’s have a look at them and see what technical analysis with indicators is all about.

Moving Averages

MA’s or Moving averages & EMA’s or exponential moving averages are common technical analysis indicators.

The 50-day and 200-day moving averages would probably be the most commonly used. However, I don’t use them. I use a 10 & 20-day EMA for my strategy.

The green line above is my 10-day EMA, and the red line is my 20-day EMA.

In the strategy that I use, the 10 & 20 EMA area is called the Cradle Zone. The price will always move away from the cradle zone and then come back into the cradle zone. The red arrows are not signals but examples where the price moves into the cradle zone and has them moved away.

For a buy signal, one of the conditions of entry for me is that there must be a small bullish candle in the cradle zone. If you want to take short trades, it is the opposite. I must have a small bearish candle in the cradle zone. This is only one of the several conditions that must be met on my checklist before considering taking a trade.

If you want to learn the full strategies that I use, click on the banner below and start with the free crypto trading course.

TraderCobb

Support & Resistance

I also use support and resistance lines in the strategies that I use. However, only horizontal lines, NO sloping lines.

You have probably seen charts with lines drawn all over them and heard terms like bullish flags etc…

Drawing trend lines like this is too subjective for me, so I only use horizontal lines for support and resistance. They are not subjective when you draw them only horizontally. The charts get way too messy for me as well. I like to keep my trading simple.

The yellow line above is how I draw resistance lines. I would consider this a fairly strong level because it has three touches at this level, and it is also a round number being $9,800 exactly.

I personally would be hesitant to take a buy below this level unless I could reach my exit target before the $9,800 level. Once it broke through that level, it could likely become support. I would then be looking for buy signals off that level.

MACD

The Moving Average Convergence Divergence is another indicator that I use. However, I do not use the default MACD

I uncheck the Histogram and signal box, so I am only seeing the blue MACD line.

I use the MACD to see if there is convergence/divergence with my price. The MACD must be in the same direction as my price.

I must have a higher high in price for a buy signal, and the MACD MUST be in agreement. If it is not, it voids my entry and is not a valid signal for me.

For me and the strategies that I use, this is just one more indicator that I use to decide on a signal. If the MACD is in agreeance, then that ticks another box.

It does not mean I can take a trade. It is just one step closer to meeting all the conditions required for me to take a trade.

 

MACD Example

In the example below, you can see what I mean. I have drawn the yellow lines in for reference only, the price has made a higher high, and the MACD has also made a higher high.

If the MACD were divergent or a lower high at the 2nd point, it would not agree with the price, and it would not meet my conditions for an entry.

This is the only way that I use the MACD. Once again, it is straightforward. The way that I trade is 100% mechanical. I use a checklist and tick the boxes. All the boxes must be ticked before I consider taking a trade.

If only one condition is not met, I still can not take the trade. It is black & white, with no grey areas. It either meets the conditions, or it does not. You MUST trade what you see, not what you think.

If you want to learn the strategies that I use and trade 100% mechanical with a checklist, start with this free trading course that will teach you all the basics that you need to know before purchasing the exact strategies that I use – Click the Banner Below.

TraderCobb

Fibonacci

The Fibonacci retracement is the only other tool that I use in my technical analysis with indicators.

Fibonacci numbers are exciting to me. I find them fascinating, and you can use them in all sorts of ways, but I only use the Fibonacci retracement for the strategies that I use.

A Fibonacci retracement for an up-trend must be drawn from the low to the high price point and the opposite for a downtrend. It is then used to find a level where price might retrace to.

You can see that price had retraced to the 61.8% Fib level exactly in the example above. Once again, this is only an indicator, and it is NOT a given. Price can and will do whatever it wants. It is quite freaky, though, when you start using Fib levels, how price seems to notice the levels.

For a full explanation, you can read my post ===> Fibonacci Retracements Explained.

Putting it All Together

I love using Technical Analysis with Indicators, and what I have shown you above forms only a small part of my trading strategies. I use three different strategies for different market conditions.

As an example of the cradle strategy, I have a checklist that 8 essential factors must be met before I consider taking a trade. The way I trade is not hard to learn. In fact, it is quite simple and basic. Putting it all together with a solid Trading Plan and having the right Trading psychology takes some work.

The easiest way to fast track your Wealth with Crypto journey is to find a good mentor or someone who has achieved what you want to and copy them. If you want to learn Technical Analysis with Indicators and access the exact strategies that I use, start here with the ===>  Become a Trader – Free Crypto Course.

Once you have done the free course, you can purchase Become a Master Course and use the same strategies that I personally to create Wealth with Crypto.

Be the Best you can Be

Crypto Dave

TraderCobb


! DISCLAIMER: I am not a financial advisor. This is not financial advice. The content and material I provide on 2dsirecrypto.com is my opinion only and general in nature. Always do your own research before investing any money. You should always understand the risks involved in trading and investing and seek advice from licensed professionals before undertaking any investments of your own.

4 thoughts on “Technical Analysis with Indicators”

  1. Good day, I am pleased to have read this important information. Well, most people have opted for creating wealth with crypto online, but the question that remains would be how best can that be done? I like the technical analysis that can be used with indicators, as you outlined that indicators guide traders on what might happen. But I think it’s still a bit risky if it’s not a guarantee. Anyway, this is helpful. 

    1. Life is risky, my friend, and there are NO guarantees in life except you will die someday.

      If you think the markets are too risky, don’t trade – simple. The way that I trade, I only ever risk 1% of my trading bank. So I would need to make 100 bad trades in a row to lose my trading account. That will NOT happen, so I don’t consider what I do risky.

      Why don’t you do the free course and decide if it is risky once you have done the course? It might just surprise you.

      If you want Guaranteed returns with crypto read my article on ===> How to Invest with Crypto | CAKE DeFi Lapis

      Crypto Dave

  2. This is a very interesting article on technical analysis with indicators and the tools that you use for determining whether to trade crypto or not. I am not familiar with the terminology of cradle zone, so found this very educational. Crypto is a very volatile product and I have opted to buy an ETF in Ethereum for a long term investment. But I have nothing to loose to sign up for the free course to learn more about trading. 

    Would these indicators also be applicable to other shares or different currencies, or is it only for crypto trading?

    1. Great question, Yes they definitely can be used on all markets, in fact, the strategies that I use can be used on any market and any timeframe. The Cradle Trade is one of the strategies, you will get a good idea of what it is all about from the free course.

      ETH is a good coin with big potential, it is number 2 in market capitalization. I think you will get a lot from the free course.

      Crypto Dave

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