How to Identify Tops and Avoid Roundtripping Everything

A Foolproof Method Based on the 15EMA (No Complicated Indicators Needed)

Hi everyone, I’m Warren Muppet, a wannabe trader who has been seriously active since 2023. I started with crypto in 2021 and lost everything multiple times. I’m not the best trader in the world.

I still have a lot to learn, especially when it comes to longing,but one thing I do well is shorting and identifying tops. I don’t know if it’s a psychological predisposition or an innate ability to recognize these patterns, but I find shorting much easier than longing.

In times like these, when most people have lost everything, I think it’s useful to share my methods for recognizing when a trend is exhausted and it's time to sell. The goal isn't even to sell the exact pico top,often, it would be enough to sell just 10-20% below the ATH (just ask Solana holders these days) or eth holders in the past.

I won’t waste time with unnecessary talk.I want to teach you a simple and effective method.

Distinguishing Uptrends from Consolidation/Ranging Periods

Our goal is to identify tops and use an effective method to determine whether it's time to let go of our hard-earned heavy bags. Essentially, we need to develop a system based on a specific invalidation level that helps us decide when to sell/short or at least hedge our spot holdings.

My Method: Starting with the Daily Trend

How do I identify the daily trend?

1. Add the EMA15 indicator to any coin on the daily chart.

2. You’ll notice that uptrends are often characterized by the price continuously bouncing off the daily trend (light blue).

3. After forming some local tops, the price loses the daily trend and retests the weekly trend (dark blue).

4. If the uptrend is still intact, it reclaims the daily trend and continues higher.

5. Use the weekly trend, still with the 15EMA, and observe what happens next.

With this method, you would have easily sold Bitcoin last year at around 70K and could have bought back at 48K, during the first retest of the monthly trend, which is not shown in this chart.

Here, you would have easily sold SOL at 240... not bad, right?

Let's try again with last month's Bitcoin top.

Super easy short/sell around 105k.

With the same method, you would have sold Ethereum at around 3700. I won’t show the chart, but would you be able to spot all the steps? Give it a try!

Now I’ll share the Tradingview Pine Script code for the indicator I created. It’s customizable and allows you to see both the 15EMA and 15SMA at the same time for different timeframes, with options to adjust their style and colors.

//@version=4

study(title="Trend 15 MultiTF", overlay=true)

// Definiamo la lunghezza delle SMA

len1 = input(title="SMA Weekly Length", type=input.integer, defval=20)

len2 = input(title="SMA Daily Length", type=input.integer, defval=20)

len3 = input(title="SMA 4 Hours Length", type=input.integer, defval=20)

len4 = input(title="SMA 1 Hour Length", type=input.integer, defval=20)

// Definiamo la lunghezza delle EMA

len5 = input(title="EMA Weekly Length", type=input.integer, defval=20)

len6 = input(title="EMA Daily Length", type=input.integer, defval=20)

len7 = input(title="EMA 4 Hours Length", type=input.integer, defval=20)

len8 = input(title="EMA 1 Hour Length", type=input.integer, defval=20)

// Definiamo le serie temporali

src = input(close, title="Source")

res1 = "W"

res2 = "D"

res3 = "240"

res4 = "60"

// Calcoliamo le SMA

sma1 = security(syminfo.tickerid, res1, sma(src, len1))

sma2 = security(syminfo.tickerid, res2, sma(src, len2))

sma3 = security(syminfo.tickerid, res3, sma(src, len3))

sma4 = security(syminfo.tickerid, res4, sma(src, len4))

// Calcoliamo le EMA

ema1 = security(syminfo.tickerid, res1, ema(src, len5))

ema2 = security(syminfo.tickerid, res2, ema(src, len6))

ema3 = security(syminfo.tickerid, res3, ema(src, len7))

ema4 = security(syminfo.tickerid, res4, ema(src, len8))

// Disegniamo le linee

plot(sma1,"SMA Weekly",color=#FFA07A,transp=0,linewidth=2)

plot(ema1,"EMA Weekly",color=#ADD8E6,transp=0,linewidth=2)

plot(sma2,"SMA Daily",color=#FFA07A,transp=0,linewidth=2)

plot(ema2,"EMA Daily",color=#ADD8E6,transp=0,linewidth=2)

plot(sma3,"SMA 4 Hours",color=#FFA07A,transp=0,linewidth=2)

plot(ema3,"EMA 4 Hours",color=#ADD8E6,transp=0,linewidth=2)

plot(sma4,"SMA 1 Hour",color=#FFA07A,transp=0,linewidth=2)

plot(ema4,"EMA 1 Hour",color=#ADD8E6,transp=0,linewidth=2)

Actually, you could short or sell using the same method at the first loss of the daily trend after the first top before the attention phase.

But you have to consider that when you retest the weekly trend (attention phase), if you didn’t close it, you’ll probably roundtrip it.

However, it still makes sense to do this, especially if your goal is to hedge your spot holdings and limit the drawdown as much as possible. If a blow-off occurs without a second retest, at least you’d already be covered.

You could also use a similar method based on the same system to understand when the regime has changed (bottom) and identify when the uptrend is actually starting again, like what happened with Bitcoin when it reclaimed 60K in October. But we’ll tackle that in another article, if I feel like it.

Ciaoooo