What is the best time-frame to trade Forex?

Using short charts is a very awesome and useful tool to implement into your trading in crypto currencies. Watch our latest video and learn about the best time-frame to trade Forex.

Best time-frame to trade Forex – how to use short charts

Hello and welcome to Diary of a Trader. in some of our previous videos, we have discussed the importance of identifying where market bottoms may arrive and where we may see the turning point in the market, and the video, if you watched it, it was one of the most recent videos on using Ethereum as the example, then you saw that we had all these confluent zones of these shared Fibonacci areas, we had angles within the Gann’s square of 90 and we also had a volume supporting that. But today I really want to discuss how to use, and this is really specific to just cryptocurrency, is how to use short charts, to determine whether it’s safe to go long or short in a long-term or short-term trading buy.

So, we’ll use Bitcoin as this example, so if I look at Bitcoin’s chart, I see that, you know, we have been in a downtrend and I see that we are finding some type of support maybe, but not sure. It’s hard to determine whether or not this will stay, it’s just a false support zone are we going to just continue down lower. Well, looking at just this chart, can sometimes not provide enough info or even if it does provide enough info, we always like to see other contrary and confirming information. And one of the benefits of cryptocurrencies, is that many of the most traded pairs like Bitcoin, Ethereum, Litecoin, EOS, Cardano, they will have accompanying short charts. And this is usually just from one data provider and that’s Bitfinex, they’re another cryptocurrency exchange. And so, if we look at… This is the Bitcoin-Dollar pair, but the shorts. So, this chart represents its shorts, meaning that these are bear trades, these are people who are taking short positions against Bitcoin. This chart shows us how much participation shorts are having, so if there are more people shorting bitcoin on this chart, it will look bullish, it will look like buyers. Let’s look at the daily on this. So, we can see that, as we have gone on and we’ve progressed over the last, ever since the end of the month of May and the beginning of June we’ve had an increase in the people participating in shorting Bitcoin, okay? So this is the short interest. Now, as we’re looking at this though, what has happened as we’ve moved forward during the days? We’ve gotten kind of expansive. We’ve really, technically gone parabolic, and if you remember the definition of a parabolic rise, as you have a clear and steady trend, but then, the swings or the trend, they get more and more expansive in the slope, or the pitch increases considerably as we move higher. And so, this is the definition of a parabolic move. And that is exactly what’s happened with this chart. In addition to that, we can see that in our Fib retracement from swing high to swing low, we see that we have found a stopping area not only at the top of our Ichimoku cloud but, that has also equated to the 50% retracement zone in our Fibonacci retracement. So, we see this short volume is coming down, so a lot of people who bought, if you remember in a parabolic rise, that people are experiencing FOMO, Fear Of Missing Out, where people have participated at the top here, thinking they’re going to short at these levels, but in fact they’re going to be the people that will feel a rise lower.

So, if we’re looking at the chart here, we see that as Bitcoin has been rising in value, from its most recent swing, we see that the Bitcoin shorts have been falling. And so, as we see more and more decreased values in this chart, we can see higher prices correspond to Bitcoin. Now, one thing we may notice, and this does happen, as you’ll see, Bitcoin rising in value, as well as the shorts. And so, there’s a couple of ways that you can view this, because if prices in Bitcoin are rising but the short interest is rising as well, that means that there are a lot of people trying to short the rally in Bitcoin. And, if we don’t see any response of selling, as more shorts are pouring in, then all that means is that there’s not enough short opportunity, or rather there’s not enough participants to move prices lower, and that means that all the people that have been buying are eventually going to have to cover, because as the prices rally in Bitcoin the short positions decrease in value and they’re going to get, you know, this is traded on margin, so you’re going to have to eat a loss and those people who are trying to short and are holding those shorts as Bitcoin is rising, they’re going to have to cover and they’re going to be turning into buyers.

So this is a good tool that not a lot of people utilize, but people should, and in fact, in my opinion, I think that this is a phenomenal tool that we have at our disposal because we get to see a chart that represents the actual participation of people who are taking the short side of this market. And we really do not get access to this kind of information in other markets such as the futures or in Forex. So, we get to see a live representation of the shorts and they even have a long, Bitfinex has a chart showing the long participation as well. So, this is a very awesome and useful tool to implement into your trading in cryptocurrencies, and I hope you found this video helpful and useful, and I look forward to talking to you in our next video. Have a great day! Bye-Bye.