Hi Guys, Hope you all are doing good, Today we are going to discuss about MACD(Moving Average Convergence/Divergence) and RSI(Relative Strength Index) and will understand Why they are not useful for Price Action Traders. We'll also cover why Breakout Trades are more crucial in the later section of the post.
Key Points:
In essence, MACD is most reliable about the move but you are entering and exiting very late.
So, you can't SHORT the overbought RSI for major Downside move OR you can't LONG the oversold RSI for major Upside Move Because Price can still Spike/Spill to the opposite side leading to Multiple Divergences and would probably stop you out. RSI 50 level is key to shift the bias in opposite Directions.
What do we actually Need to know the same
One Moving Average(MA) on the Chart is enough to know the Trend whether we are moving down or we are moving up.
It could be EMA(100) or EMA(200) or any other moving average.
What does this Implies: => We Need an Impulse Move Up above Moving Average to ensure that Strong Buying Pressure is there Behind the Move and a bit of rest indicating some Profit Booking in consolidation Area and then Next Impulse Leg Breakout will happen.
and Where would be MACD Line after consolidation ?? Most likely It would be above Zero Line => indicating a change in Trend.
馃敼How to Define Targets: Use Fib Extension Levels
馃挗* Start Visualizing all on the Price Action without Derivative Indicators.
馃挗 * Keep your Analysis as Simple as Possible.
馃毊 * The sooner You'll get rid of all indicators on your chart, the Better It will be.
We Mostly Trade Breakouts due to Its "Time Efficiency" which are follow up Moves of Big Impulse Behind it.Its means Your Funds are only stucked in the trade for the minimal amount of Time.
馃敼Why BREAKOUT TRADES* ??
i) Breakout trades are less emotionally challenging,
Either Market will go in your direction as expected OR you'll be proven wrong & kicked out of the market with pre-defined Risk.
ii) Breakout Trades perform really FAST because all Eyes are on that coin meaning more market participants => more buying/selling pressure.
iii) You don't have to check your coins going down for months and need not to marry with them & hoping one day you'll get some return. There is no need to Find Deep Ocean Floor(for BUY) or SKY height (for SELL)
iv) Trend is your Friend, Ride with the Wave instead of going against it. Buying Pressure should be backed up by Huge Wave behind it.
馃敼then When HODL/ buying DIPs works ??
In Bull Market when market participants are so in high number to enter in any dipped coin.
馃敼If Project is good, doing awesome work and still its not reflecting on the Price Action, then It means nobody give a shit about it.
If they are really doing good, some insiders would have start buying it & you'll get its traces on the chart.
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Hope this helps, Happy Crypto Trading 馃槉
