Introduction
This is the introductory post to my beginner’s Swing Trading Strategy series. It is designed for anyone who wants to understand the basic elements of technical analysis and apply them to a swing trade system. If you’re completely new to technical analysis and charts this series will give you everything you need to go from guessing at price action to developing a high probability understanding of what is likely to happen next. That alone will put you in a better position than the majority of crypto retail investors. If you already have some exposure to technical analysis and charts this series will enable you to develop your understanding further and to have confidence to execute long and short positions on all timescales. That will put you in a stronger position than many of the big influencers on crypto twitter.
Like any swing trade system, it is more successful on higher timeframes and beginners are recommended to trade on the daily or weekly charts only. If you’re too impatient to work on those timeframes by all means apply it to lower timeframes but do so on the understanding there is much more noise and fakeouts and your results are likely to suffer accordingly.
Overview of series
The series is made up of 10 posts (including this one), the remainder of which cover different elements of the RSI trading strategy. Each of these is summarised below.
Part 2 - Tradingview [link to be added] - To make use of this strategy you are going to need access to tradingview (or a similar platform) so that you can apply technical analysis to your favourite crypto assets. You can do everything you need to get going with a free account and this post explains how to set one up and how to navigate around tradingview.
Part 3 - Trading with the trend - When starting out in crypto it is helpful to be able to zoom in and out of different timeframes (weekly, daily, 4 hourly, hourly and so on) and develop an understanding of the characteristics of each. In particular, that the higher timeframes (particularly the weekly) are the best timeframes for understanding the general trend of the market and whether your focus should be on longs or shorts.
Part 4 - Price trendlines - This key element of technical analysis helps show the local trend of whatever timeframe you are in and potential areas of trend change. Understanding price trendlines provides potential entry points for trades (long and short), and also exit points.
Part 5 - RSI trendlines - This other key element of technical analysis is the principal focus of my trading strategy. When used correctly, it is a leading indicator and can enable you to get in to trades before price trendlines are broken.
Part 6 - Divergences - Divergences are about differences in direction between price and RSI trends. In simple terms, bearish divergence is when price is rising and RSI is falling, and bullish divergence is when price is falling and RSI is raising. Divergences can help target likely trend reversal probabilities.
Part 7 - Anchored vwap - The Anchored Volume Weighted Average Price (Anchored VWAP) is a trading indicator that provides the average price from a specific starting point (the “anchor”), factoring in price and volume. It can be used as a confluence indicator along with fibonacci levels to determine likely resistance/support levels.
Part 8 - Fibonacci levels - Fibonacci levels are horizontal price levels which might indicate support/resistance levels, and can be used to establish take profit levels. They are drawn from key pivot points (local low to local high and vice-versa) and the famous “golden pocket” level is often a magnet for price to retrace to after it has pumped or dumped.
Part 9 - Risk management - You can have the best trading strategy in the world, but if you can’t manage risk you will ultimately fail. No trading system is perfect so you need to have a risk management strategy which enables you to take profit and/or cut your losses and move on to the next trade.
Part 10 - Putting it all together - Bringing all of these elements together will give you a solid swing trade strategy.
