How To Identify The Direction Of Crypto Futures Trading

一、BTC price trend is highly related to US stock market

As the crypto asset market matures, crypto assets represented by BTC have been accepted by traditional institutions, become part of their investment portfolio, and their price movements affect global financial market performance. The BTC price moves highly in sync with US stock market and it can be impacted by Fed interest rate, inflation rate, unemployment rate, US debt market, geopolitics, economic cycles and various factors.

The chart above is the BTC price and the NASDAQ index trend from the beginning of this year to September 1. We can see that the bitcoin and NASDAQ index moved in sync, with a high correlation. Therefore, to identify bull and bear market trends of the crypto market, you need to identify bull and bear market trends of the US stock market from the fundamental analysis.

二、Find answers from common technical indicators

1. Average line system
   1. Candlestick chart time frame: 4 hours
   2. Indicator: moving averages
   3. Parameter: 5, 60
   4. Indicator usage: In this trading system, the golden cross indicates a bullish signal and death cross indicates a bearish one. In BTC candlestick charts with a time frame of 4 hours, the 5-day moving average is used as the short-term average, and 60-day MA is used as the long-term average. When the 5-day moving average crosses above the 60-day MA, it indicates that the market is moving towards the direction of long. Vice versa, when the short-term MA is below the long-term MA, the market moves towards short.
2. MACD indicator
   1. Candlestick chart time frame
   2. Indicator: the king of technical indicators - MACD
   3. Parameter: 12, 26, 9
   4. Indicator usage: MACD is known as the king of technical indicators. It is very meaningful in real trading. When fast and slow lengths are over the zero axis, the market trend is likely to be in a long direction. MACD golden cross indicates bullish signals, and death cross indicates bearish signals. MACD bullish divergence indicates potential market reversals and a bearish divergence indicates the direction of short.
3. Other assisting indicators
   In addition to the candlestick chart trend, average line and MACD index, traders can also draw trendlines to help identify market directions. According to the Dow Theory, trend has certain inertia and will not easily reverse when it is formed. Follow the market trend. Take a short position in a bear market and a long position in the bull market. Try to avoid starting positions against the market trend.
4. Make good use of Big Data
   The Gate.io platform big data is a very useful crypto futures trading tool. The tool provides interpretation of indicators such as panic index, contract positions, long-short ratio, funds rates, etc. By combining the result with technical analysis, traders can verify the efficacy of big data and improve the win rate.
   

三、Closing thoughts

Improving returns in crypto futures trading is mainly dependent on improving win rates and profit/loss ratios. The core trading tips introduced in this article are on how to identify long or short trade directions, the core of which is to improve win rates. Specifically, fundamental analysis is taking a more important role in crypto assets trend analysis. In terms of technical analysis, in addition to common indicators, big data analyzing tools provided by Gate.io are also very useful futures trading tools. The combination of big data and technical analysis can help to verify decisions and improve win rates.
To check out more futures trading practices, go to Gate.io futures trading. Click here to register and start your journey.

Disclaimer
This article is for informational purposes only. Such information provided by Gate.io does not constitute any investment advice and we are not responsible for any investment you make. Technical analysis, market judgments, trading tips, and trader sharing may involve potential risks, changing investment environment, and uncertainties. This article does not provide or imply any opportunities with guaranteed returns.