Best Indicators for Cryptocurrency CFDs
Reading time: 9 minutes
There are numerous types of pivot point indicators available in the world of trading, such as standard ones, Fibonacci, and Murrey Math. Cryptocurrency indicators are no different. What works for you in other markets, should also work with cryptocurrencies. One of best indicators for cryptocurrency is Camarilla. There are a lot of good reasons which we will explain in detail below. We might consider the Camarilla one of the best cryptocurrency technical indicators for the following reasons:
- It identifies support and resistance;
- It helps with determining the trend;
- It adds confluence to our charts;
- It shows bullish and bearish zones of day and week;
- It spots triggers;
- It provides clear entry and exit points.
When you take a look at the Camarilla indicator, you will see even more key benefits for you as a trader:
- Levels are generated automatically each trading day;
- It fully supports pre-fact analyses, which are made daily;
- It is clear and concise;
- The chart stays simple with Camarilla lines.
Source: BTC/USD, H4 chart, Admiral Markets MT4 platform, Nov 2017- Jan 2018
Simply put, the Camarilla indicator provides well-respected, simple, and automated levels of support and resistance. According to our expert Nenad Kerkez, Camarilla is also used by some bank and institutional traders. We can easily identify levels of support and resistance, and here's how:
- W L3 – Weekly Camarilla Pivot (Weekly Interim Support);
- W H3 – Weekly Camarilla Pivot (Weekly Interim Resistance);
- W H4 – Weekly Camarilla Pivot (Strong Weekly Resistance);
- D H4 – Daily Camarilla Pivot (Very Strong Daily Resistance);
- D L3 – Daily Camarilla Pivot (Daily Support);
- D L4 – Daily H4 Camarilla (Very Strong Daily Support).
Occasionally, you might see D L1, D Cm, and D H1. Those are the very first levels of support and resistance, D Cm being the pivot point for the day.
The H3 and L3 are range levels. The price is in range or consolidation when it's in between the H3 and L3 levels. Traders can use these levels as a break or bounce level. I always try to look at the higher time frame, then look for a breakout if a trend is visible on a higher time frame.
I am looking for a bounce if a range is visible on a higher timeframe. The H4 and L4 are the first breakout targets. The price is in a breakout when the price manages to break below the L3 or above the H3 .
The first initial target is the L4 and H4. Traders can either take profit there or wait for the higher target at H5 and L5. The H5 and L5 are the second breakout targets meaning that the second and the last target for a breakout is the L5 and H5 .
Traders who missed the first breakout can attempt to join the breakout after the price hits the H4 or L4 upon a pullback or second breakout.
Camarilla levels are the primary source of the confluence that traders look for when analysing and trading. You can check how our expert analyst and professional trader Nenad analyses the market by the help of Camarilla.
Manually Drawn Historical Levels of S/R
What is Support & Resistance?
Support & Resistance (S&R) levels are a basic pillar of technical analysis (TA). The field of TA is based on patterns in price data and S&R plays a key role.
Learning how to understand, recognise, use, and trade based on S&R will, in our view, make your analysis and trading more robust on top cryptocurrency CFDs.
Sounds good, but what is S&R?
The simplest way to think about support and resistance is this:
They are price levels or price areas where the price changes direction or moves sideways.
In other words, S&R is a price level or a price zone where the price bounces.
Support & Resistance Explained
- are always found below current price;
- indicate buying pressure;
- offer a potential bullish bouncing spot or break breakout.
- are always found above the current price;
- indicate selling pressure;
- offer a potential bearish bouncing spot or bullish breakout.
Source: ETH/USD, H4 chart, Admiral Markets MT4 platform, Dec 2017- Jan 2018
We wrote ' potential bounce or break'. How high is this chance?
That depends on both the strength of the S&R and the confluence (multiple levels). But be aware that price reactions tend to be strong on higher time frames. Cryptocurrency market analysis should be much stronger when correct S&R indicators are applied.
S&R remains valid when the price is reversing or bouncing at S&R:
- Bullish bounce: the price is bouncing at support.
- Bearish bounce: the price is bouncing at resistance.
S&R becomes invalid when the price manages to break through it:
- Bullish breakout: the price is breaking through support.
- Bearish breakout: the price is breaking through resistance.
Once S&R is broken, their role can turn around like this:
- Broken support becomes a potential new resistance level.
- Broken resistance becomes a potential new support level.
Examples of S&R levels are tops, bottom, and round levels but this article will dive into more examples and which ones we might use later on for cryptocurrencies.
Why Are Support & Resistance Levels Important?
S&R levels are a key part of any market analysis or chart for a number of reasons:
- Respected: the market uses S&R levels for breakouts and bounces.
- Big market players: every technical analyst uses S&R, also traders at banks and funds.
- Universal: they appear on all instruments and time frames.
- Market phases: they appear during trends, ranges, and reversals.
- Time frames: higher time frames are more important as a larger part of the market uses these levels.
- Path of price: S&R are key to understand the "path of least resistance". More information below.
S&R levels can be compared to the footprints of the big market players. Other traders can understand their moves better if they analyse S&R.
Admiral Markets Pivot
Technical analysis S&R levels are presented uniquely and exclusively via the Admiral Markets Pivot indicator. This is a great technical indicator for cryptocurrency CFDs. It is also used as S&R Bitcoin technical indicator and definitely a great cryptocurrency indicator.
Admiral Pivot is the professionally coded indicator for trading the financial markets. We use it for:
- S&R scalping
- S&R breakout
- S&R zone
- S&R basic indicator
Its uniqueness comes from a modifier that you can find in the indicator properties.
Source: Admiral Pivot Indicator, MT4 SE add-on
It allows you to select any of the nine different timeframes that you can watch in the current time frame. For example, you can trade the 5-minute chart with H1 pivot points attached to the chart. Additionally, you can customise the indicator to your liking via additional options in the indicator properties.
MACD and MACD Patterns
When we apply 5,13,1 instead of standard 12,26,9 settings, we can have a visual representation of the MACD patterns for cryptocurrency CFD signals. These patterns could be applied to various trading strategies and systems as an additional filter for taking trade entries. In our opinion, the best MACD setting for a MACD pattern is, indeed, 5,13,1. How to analyse cryptocurrency CFDs? Try to follow these MACD patterns.
MACD Bullish SHS
This is a Bullish SHS (Inverse Head-and-Shoulders pattern) that marks a reversal and a possible uptrend turn. Possible entry is made after the pattern has been completed, at the open of the next bar.
MACD Bearish SHS
This is a Bearish SHS pattern (Head-and-Shoulders) that marks a reversal and a possible uptrend turn. A possible entry is made after the pattern has been completed, at the open of the next bar.
MACD Bullish Continuation
A Bullish continuation pattern marks an upside trend continuation. First, the MACD makes a downside turn from point A, marking a retracement. Subsequently, when point A is broken by the MACD histogram, it is a signal for a long entry.
MACD Bearish Continuation
A Bearish continuation pattern marks an upside trend continuation. First, the MACD makes an upside turn from point A marking a retracement. Subsequently, when point A is broken by the MACD histogram, it is a signal for a short entry.
MACD Bullish 0 Line Rejection
When the MACD comes down towards the 0 line and turns back up just above the 0 line, it is normally a trend continuation move. Points A and B mark the uptrend continuation.
MACD Bearish 0 Line Rejection
When the MACD comes up towards the 0 line and turns back down just below the 0 line, it is normally a trend continuation move. Points A and B mark the downtrend continuation.
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