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Basic Chart Setup

I use TradingView.com. I’ve got 2 SD Bollinger Bands, Keltner Channel, and MACD indicators. A good understanding of trade psychology and technical analysis is needed to be successful. Losses are possible — do not bet any money you aren’t willing to 100% lose.

I like to use TradingView.com. I have the free version which only allows 2 or 3 indicators at once and, honestly, that’s all I need. Here, I have Bollinger Bands set at 2 Standard Deviation, Keltner Channel, and MACD.

The Pancakeswap prediction cards trade every 5 minutes. So, I use the 5-minute chart for confirmation of price direction, but actually use the 3-minute chart to scalp, in a way. Since the 3-minute candle will close sooner than 5-minutes and the next candle opens, using the 3-minute chart is sort of like looking into the future of the 5-minute chart!

I trade Reversals only, because they have more conviction on price direction than when the price is chopping up and down almost randomly. I look at the price candles, volume, MACD for trends.

For Price Candles, I like to trade reversals. For example, if the candles appear to be nearing a bottom, I look for a bottom wick and 2 candles to close above the low candle’s top wick. This, to me, would be confirmation that the price could be reversing. There are times that it does not though. There are a lot of times the price is just chopping up and down in a narrow range, and I have no “edge” in prediction up or down, so no trade is placed.

Bollinger Bands measure standard deviations of price. Like Rubber Bands, if a price candle touches or exceeds the line of a Bollinger Band, expect the price to snap back in a “reversion to the mean” movement to, at least, the mean, and sometimes to the opposite Keltner or Bollinger line.

The Bollinger Bands (green outer boundary of the price chart above) measure standard deviations of the price. It’s is widely known that about 68% of the price movement will occur within this 2 SD range. Occasionally, it can trade out of it into the 3 SD. Think of Bollinger bands as rubber bands — they always want to snap back to the middle or “revert to the mean”. So, if you see price candles touch or exceed the Bollinger Band line, expect an imminent reversal to at least the mean.

The Keltner Channel measures volatility. I don’t use it by itself, but rather how the Bollinger Band interacts with it. When one or both of the Bollinger Band lines compress and enter the Keltner Channel, this is called a “squeeze”. You’ve probably heard of a “short squeeze” like on stock tickers GME or AMC … Well, this is NOT that. This is something like a consolidation squeeze — like a tug of war between buyers and sellers (or trading bots), and eventually you get to a price point where one exceeds the other, and the price bursts into the direction of the winning party. At that point, the Bollinger Band line would exit the Keltner Channel and is often accompanied by an explosive price candle(s) and the squeeze is said to have “fired”. In the charting picture above, at the end of the charting, you can see that the top green line of the Bollinger Band had just entered the top of the Keltner Channel.

I often look for a consolidation squeeze to “fire” as the line of a Bollinger Band exits from within a Keltner Channel. This is NOT THE SAME as a short squeeze that you hear about with GME or AMC stock tickers.

[Just as an aside and to understand the difference between this type of consolidation squeeze and a short squeeze, here is an explanation of a short squeeze: A short squeeze is when people who have sold a stock short get stuck on an upward price action, causing them to lose money. In order to close their short position, they have to “buy to cover” or buy to close their position, often at a loss in this scenario. This buying pressure added on top of dip buyers doubles up the upward movement of price, hence the almost parabolic movement of short squeezes. So when a stock ticker has a “high short interest”, that means a lot of the stock is held in short positions and should the price of the stock rise and cause losses to short positions, then you’d get that exponential price action.]

The MACD measures the power of price movement. A wider separation means a more powerful movement. The width of space between the 2 lines is depicted by the histogram bars. On a 3-minute chart, I might look for 5–8 histogram bars before expecting a possible reversal, and on a 5-minute chart, I’d look for 4–5 histogram bars before expecting an imminent reversal of price direction. This is in general and does not always work, so you cannot trade off of the MACD alone.

The MACD stands for Moving Average Convergence Divergence. It measures the power of the price’s movement. So if the 2 lines diverge or spread apart quickly, then the direction of movement will be swift. If the space between the lines is narrow, then the movement in the direction will be slow. The space between the lines is visually represented by the histogram bars. The 2 lines are a blue short term moving average, in this case averaging 12 previous candles, and the long term red moving average line averaging 26 previous candles. The lines themselves can be used for their slope — like if it appears to be topping off or bottoming out, but watch out for fake outs. And the lines can be used for their upside or downward cross to confirm direction.

There’s a few ways I like to use the MACD and you cannot trade off of it alone, because it is a lagging indicator — it is responding the the past and cannot predict the future: