The market trend is your buddy in every financial market. When investing in financial markets like the crypto market, there are a range of ways to use technical analysis to forecast the next market path or evaluate the best exit and entry points for a trade.
Flat line trading is one of the most common and successful trading strategies for deciding market exit and entry points. A flat line trading strategy, when paired with the Average True Range (ATR), helps you to precisely evaluate your exit strategy.
Flat line
A flat line is a straight line drawn between two closing values. A flat line is a common pattern used by financial traders to assess the direction of the market. In a trend map, a flat line connects two or more closing prices and is drawn from right to left.
A flat green line means that the closing price is at the top of the table, while a red line indicates that it is at the bottom. You can use moving averages for support and resistance as well as flat lines when drawing a flat line.
Flat line trading strategy
The support and resistance lines can be used successfully in cryptocurrency trading to apply the flat line trading strategy. The first step in implementing this strategy is to determine if the crypto asset in question has crossed or is about to cross the resistance or support threshold.
It would be better if you could then wait for the asset to start correcting itself. If this happens, the next move is to wait for the asset to try to retest the resistance or support line for the second time.
This strategy might not be successful if the price adjustment and retest do not occur within a short period of time. If you're using a 1-minute or lower time frame map, the price retest and correction must happen within ten minutes of the initial resistance/support line checking.
In addition, the asset should display a flat support or resistance line and be contained within a pipe. Although the difference is small, it can be seen if you look at the chart closely. And if an asset is trading in a small range, the price will still fluctuate slightly. For this technique, a flat line must show a precise horizontal line across the chart's face.
After all of the previous signals have occurred in the correct order as explained above, the final step in the flat line trading strategy is to enter a deal. The type of trading you do, however, is dictated by the level of support or resistance. A buy option should be executed when the support line is at the bottom of the trading table.
On the other hand, if market conditions are circling the resistance line, you can sell the asset. Nonetheless, by using technical indicators in conjunction with the flat line trading strategy, the ultimate trading decision should be based on them. The ATR, Moving Averages, and Fibonacci Retracements are examples of these measures.
Technical indicators
Average True Range
The Average True Range technical analysis metric is one of the most commonly used in crypto trading. This metric is the average of true ranges over a given time span, and it's used to quantify the volatility of a crypto asset by looking at price differences.
Price points from 14 different times, such as intraday, regular, weekly, or monthly, are used to measure ATR. The ATR of crypto assets with higher volatility is higher, while the ATR of crypto assets with low volatility is lower.
When used in combination with a flat line trading strategy, ATR can help you decide when to enter or exit a market. Although the ATR does not imply price direction, it is critical for evaluating asset volatility, which is a significant factor in crypto trading.
Ichimoko Cloud Indicator
For cryptocurrency trading, the Ichimoku Cloud predictor is a useful technical indicator.
The indicator has several lines and is flexible, which means it can be used for a number of purposes, such as identifying support and resistance, evaluating trend direction, gauging market momentum and actions, and finally, providing simple trading signals with a high probability of success. To provide complex support and resistance, Ichimoku cloud indicators can be used in combination with flat lines.
Fibonacci retracement
Fibonacci Retracement is a series of flat horizontal lines that signify levels of resistance and support. These levels are based on the Fibonacci number, with each level having a percentage associated with it.
23.6 percent, 38.2 percent, 61.8 percent, and 78.6 percent Fibonacci retracement levels The percentage can be drawn between any two significant price points, such as a high and a low, to demonstrate how much the price has retracted. Between the two points, the indicator will establish true levels.
During a strong bull run, the Fibonacci Retracement indicates potential price movement reversals. It can be used in conjunction with a flat line trading strategy to provide precise confirmations of asset price levels prior to a retracement.
Conclusion
To enter profitable trades as a crypto trader, you must understand technical analysis aspects. The Flat Line trading strategy has been around for a while, and it's very good at determining the best market entry and exit points.
This is especially common when other technical indicators like the ATR and the Ichimoku Cloud Indicator are used. You'll definitely take your crypto trading skills to the next level if you learn how to use the flat line trading strategy.