Here we have a chart that has very strong bullish potential with very low bearish risk.
Notice the red candle with 07-Nov ’22 date. This candle marks the low for AXSBTC.
If we were to use this chart setup to trade, this low can be used as the stop-loss.
From the current price, that’s a total of 28% and that’s the risk. It is low risk compared to the potential which goes upwards to 280%, short to mid-term. Long-term there can be even more because on the next altcoins market bull-run we will see new All-Time Highs, imagine how far up this can go.
For trading we always use a manual stop-loss.
If we close in to the daily chart, we have more signals to look at.
Today, we have a huge green candle. A candle can be also called a session.
A session can last 1 minute, 1 hour, 4 hours, 1 day, a week, a month… As long as you want, it depends on what timeframe you set your settings to.
Daily timeframe, 24 hours per candle/session.
Today’s candle is really strong and was trading below all the moving averages.
This candle moved above EMA10, EMA50 and EMA100, sending out a strong bullish signal.
There is also a volume breakout and a very strong RSI.
Now, this signal is only confirmed when the session/candle closes, why?
Since the day is not over, prices can move down and close below those levels and thus the signal would be nullified but if the session closes above, we call it confirmed.
We need multiple confirmed signals to decide on any potential market move.
Say you have a bullish bias on a cryptocurrency trading pair.
This bullish bias needs to be supported by multiple signals to be of value because only one or two signals isn’t enough because they can be easily nullified.
With dozens of signals or signals that are strong, your chances are big that the market will move towards your goal.
In the case of the Axie Infinity altcoin trading pair, AXSBTC, we looked at some bullish signals on the weekly and daily timeframe, strong signals, which gives us higher chances to succeed.
Now, having many signals going your favor doesn’t mean that the market will move in whatever way you want or predict. The market can still change at anytime and that’s why we plan before we trade.
In the case the altcoin pair drops, we have a stop-loss. Risk well defined.
In the case the altcoin pair moves up, we have a plan to sell at the different resistance levels as prices go up.
These are some of the basics of trading altcoins and reading charts.
Stay tuned for the next analysis, make sure to subscribe and follow if you enjoy the content.
See on the next one.
Namaste.
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