Unveiling Crypto Market Insights - Long term charts

9월 4일

GM kings and queens,

in our previous post, we zoomed out to 13 years of Bitcoin trading at Bitstamp. In this post, we’ll shed light on the benefits of long-term charts and how and when to use them.

Introduction
The daily bar chart is the most commonly used tool for forecasting and trading. However, for a comprehensive trend analysis, it's important to consider how the daily price action aligns with the broader long-term trend. To do this, longer-term charts must be employed, as John J. Murphy explains in his book Technical Analysis of the Financial Markets.

The importance of a longer-range perspective
Murphy highlights that long-range price charts offer a perspective on market trends that daily charts alone can't provide. These charts reveal broader movements, helping traders understand the overall direction of the market.

Long-term trends dispute randomness
One striking feature of long-term charts, as Murphy points out, is the clear definition of trends that can last for years. This challenges the idea of market randomness and underscores the value of long-term trend analysis.

From long-term to short-term charts
Murphy recommends analyzing charts in order: starting with the long-term and progressively zooming in. This approach ensures that your short-term analysis aligns with the larger market trends, reducing the need for constant revision.

Long-term charts: forecasting, not trading
Long-term charts, while valuable for identifying major trends and price objectives, are not designed for precise trading decisions. As Murphy emphasizes, for timing entry and exit points, it's more appropriate to rely on daily and intraday charts.


Do you consider a longer-range perspective an important part of your analysis?

Which longer-term charts do you prefer: weekly, monthly, or something else?

How does the Bitcoin chart look to you on the weekly and monthly timeframes?

Let us know in the comments!


Reference:
Murphy, John J. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications. New York Institute of Finance, 1999.