How to arrange the monthly KD low-level golden cross + weekly positive line with large volume + daily line breaking through the annual line?

A monthly KD low-level golden cross, weekly green candle with high volume, and daily breakout above the 200-day SMA signal a high-probability bullish reversal in crypto markets.

Jul 28, 2025 at 06:07 pm

Understanding the KD Indicator and Its Low-Level Golden Cross

The KD indicator, also known as the Stochastic Oscillator, is a momentum-based technical analysis tool used to identify overbought and oversold conditions in the market. It consists of two lines: the %K line (fast line) and the %D line (slow line). A golden cross occurs when the %K line crosses above the %D line, signaling potential upward momentum. When this crossover happens at a low level—typically below 20—it indicates that the asset has been oversold and may be poised for a reversal.

In the context of cryptocurrency trading, identifying a monthly KD low-level golden cross requires analyzing the monthly candlestick chart. Traders should ensure that both the %K and %D values are below 20 before the crossover. This condition suggests strong bearish exhaustion and increases the probability of a bullish turnaround. The longer time frame adds weight to the signal, making it more reliable than shorter-term crossovers.

To set up this analysis:

• Use a charting platform such as TradingView or Binance’s advanced chart.
• Switch the time frame to monthly (1M).
• Apply the Stochastic indicator with default settings (14, 3, 3).
• Monitor for the %K line rising above the %D line while both remain under 20.

This setup acts as the foundational signal in the multi-layered strategy described in the title.

Confirming Momentum with Weekly Positive Candle and High Volume

After identifying the monthly KD golden cross, the next layer of confirmation comes from the weekly chart. A positive (green) candle on the weekly timeframe, accompanied by large trading volume, strengthens the bullish signal. Volume is critical because it reflects market participation and conviction behind the price movement.

A weekly positive candle with large volume indicates that buyers have taken control during that week, absorbing previous selling pressure. In cryptocurrency markets, where volatility is high and sentiment shifts rapidly, such volume-backed moves are especially significant. This pattern suggests accumulation by larger players or institutional investors.

To verify this condition:

• Change the chart to the weekly (1W) time frame.
• Look for the most recent completed candle to be green (positive).
• Check the volume bar corresponding to that candle; it should be significantly higher than the average of the past 4–6 weeks.
• Use volume moving averages (e.g., 10-week volume MA) as a benchmark for comparison.

Platforms like TradingView allow overlaying volume profiles and comparing current volume to historical norms. This step ensures that the observed volume surge is not just noise but a meaningful shift in market dynamics.

Daily Chart Breakout Above the Annual Moving Average

The final component of this strategy is a daily chart breakout above the annual moving average. The annual moving average typically refers to the 200-day simple moving average (SMA), a widely watched long-term trend indicator. A close above this level on the daily chart signals that short-term momentum has overcome long-term resistance, often marking the start of a new uptrend.

In cryptocurrency, where prices can remain below the 200-day SMA for extended bear markets, a sustained breakout is a strong psychological and technical milestone. It often triggers algorithmic buying and attracts trend-following traders.

To confirm this breakout:

• Set the chart to the daily (1D) time frame.
• Add the 200-day SMA to the price chart.
• Wait for the closing price of a daily candle to be above the 200-day SMA.
• Ensure the breakout is supported by increased volume to reduce the chance of a false signal.

It is essential to wait for the candle to close fully. Intraday spikes above the SMA do not count. The breakout must be confirmed at the end of the trading day (UTC time in crypto markets).

Combining All Three Conditions into a Trading Signal

When all three conditions align—monthly KD low-level golden cross, weekly positive candle with large volume, and daily close above the 200-day SMA—the confluence creates a high-probability bullish setup. Each layer operates on a different time frame, providing a top-down confirmation structure.

The monthly signal provides the macro context, the weekly confirms intermediate momentum, and the daily gives the entry trigger. This multi-timeframe alignment reduces the risk of false signals common in volatile crypto assets.

To execute this strategy:

• Monitor major cryptocurrencies such as BTC, ETH, or BNB that have sufficient historical data.
• Use alert functions on TradingView to notify when the KD crossover occurs or when price crosses the 200-day SMA.
• Cross-verify volume spikes using on-chain data platforms like Glassnode or CryptoQuant for added confidence.
• Consider entering a long position after the daily close confirms the SMA breakout.

Position sizing should account for volatility. A partial entry upon breakout, with the option to add more if the price retests the 200-day SMA as support, is a prudent approach.

Practical Example Using Bitcoin (BTC)

Suppose in January, Bitcoin’s monthly KD lines are both below 20, and the %K line crosses above %D—this is the monthly low-level golden cross. In the following week, BTC forms a large green candle on the weekly chart with volume 50% above its 10-week average—this satisfies the weekly positive large-volume condition. Then, in the subsequent days, BTC’s daily closing price moves above the 200-day SMA, which had been acting as resistance for months.

A trader following this strategy would interpret this as a strong buy signal. They might initiate a long position at the close of the breakout day, placing a stop-loss below the 200-day SMA or recent swing low. The target could be set using Fibonacci extensions or prior resistance levels.

Platforms like Binance or Bybit allow setting conditional orders based on these criteria. Using TradingView’s integration with these exchanges, alerts can trigger manual or automated entries.

Frequently Asked Questions

What if the daily price closes above the 200-day SMA but volume is low?

A breakout with low volume is considered weak and may lead to a false breakout. It lacks confirmation from market participants. Traders should wait for a retest with higher volume or avoid the trade until stronger evidence emerges.

Can the KD golden cross occur above 20 and still be valid?

The signal loses strength if the crossover happens above 20. A low-level golden cross specifically requires both lines to be under 20 to indicate oversold conditions. Crossovers above 20 are less reliable for reversal signals.

How do I adjust the KD settings for different cryptocurrencies?

The default 14,3,3 settings work well for most cases. However, highly volatile altcoins may benefit from smoothing—try 21,5,5. Always backtest changes on historical data before live trading.

Is the 200-day SMA the only moving average to use?

While the 200-day SMA is standard for "annual" reference, some traders use 180-day or 210-day SMAs. The key is consistency. The 200-day SMA remains the most widely followed and thus carries more market impact.