When it comes to trading any cryptocurrency asset, identifying trading opportunities is very important in ensuring maximum profit in the market. There are so many strategies that can be used for trading, however, it is important to identify the price direction so as to make the best trading decision. For this, I will be making use of the line chart with the MACD indicator to take advantage of the bullish and bearish trading opportunities.
Bullish trading using the Line chart with Alligator indicator and MACD
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For the bullish trading, we can see that the lips of the alligator indicator has crossed above the teeth and the jaw, and the MACD confirmed this by the MACD line crossing above the signal line. The buy trading opportunity was identified as the MACD line stayed above the signal line as we can see on the screenshot
Bearish trading using the Line chart with Alligator indicator and MACD
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For the bearish trading, we can see that the lips of the alligator indicator has crossed below the teeth and the jaw of the alligator indicator, and the MACD confirmed this by the MACD line crossing below the signal line. The sell trading opportunity was identified as the MACD line stayed below the signal line.
Advantages and Disadvantages of Line charts
Advantages of line chart
- The line chart focuses more on simplicity and is easier to understand
- The line chart only makes use of the closing price, making is great for long term traders.
- Line chart provides better market insight for longer timeframes
- Line chart provides an easy way for traders to quickly identify support and resistance levels on the chart
- The line chart makes it easier to quickly identify the direction the market is going and overall trend in the market.
- Line chart helps to eliminate noise in the market as a result of price fluctuations and smoothens out price information by utilizing only the closing price.
- Line chart can be used in combination with technical indicators
Disadvantages
- Line chart provides less information on what is happening in the market in lower timeframes
- Line chart is less effective when it comes to short term trading or scalping
- Line chart focuses on only the closing price information and as a result, eliminates other valuable price information such as opening price, highs and lows price which is also important for trading
- Line chart doesn’t show signals like Gaps on the chart and also there isn’t any visual representation of whether the buyers or sellers are in control of the market
- Line charts doesn’t provide insights such as strengths of the buyers and sellers in the market
- Line chart doesn’t provide market patterns that is useful for identifying trading signals.
Line chart remains one of the most popular and used charting tools as far as technical analysis is concerned. When it comes to trading, technical analysis is key and also price chart. A cryptocurrency chart is basically a graphical visual representation of what is happening in the market, in terms of price action over a period of time. At the moment, a line chart is one of the common types of charts that are available on various charting platforms such as tradingview. A line chart was developed to visually represent and simplify price information on any cryptocurrency asset over a time period. Line chart can be used on any timeframe, however, it has proven to work well for longer timeframes.
I think line charts are undoubtedly good for long term trading or I should say investing because you are not affected by the micro level movements, but if you are a typical trader and you want to take trading as a full time career then analyzing candlestick charts is a better option to dive deep into the price action.
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