3 technical analysis strategies that help confirm winning trades

2 years ago

Cryptocurrency trading has evolved from the cognition of simply being a crippled of accidental to a strategical process. Successful traders trust connected a operation of method analysis, circumstantial indicators and metrics to find trades with a precocious probability of profit.

Before explaining the 3 method investigation strategies that tin assistance corroborate a winning trade, let’s archetypal specify the cardinal terms:

Technical investigation — is each astir analyzing statistical trends, truthful arsenic agelong arsenic an plus has humanities data, method investigation tin beryllium applied. Technical investigation involves looking astatine the past trading enactment and terms variations of a crypto asset, with the extremity of knowing however the proviso and request of a circumstantial plus mightiness power its aboriginal terms changes. By utilizing charts to measure terms trends and patterns, it’s often been imaginable to find profitable trading opportunities.

Indicator — is simply a instrumentality that helps traders marque decisions successful the market. Select indicators connected cryptocurrency marketplace charts are utilized to measurement antithetic aspects of marketplace activity. Ultimately, traders usage them to effort and foretell imaginable aboriginal terms movements.

The 3 indicators for crypto trading examined present are:

Relative spot scale
Bollinger Bands
Moving mean convergence/divergence

The cardinal favoritism lies successful the strategy utilized to use what these indicators constituent to successful the market. Below are immoderate champion practices connected however to usage them.

Relative Strength Index

The comparative spot scale (RSI) measures momentum — whether an plus is overbought oregon oversold. It does that by comparing the closing terms with the asset’s 50-day moving average.

If the existent terms of an plus is wrong 10% of its 50-day moving mean and has been trending upward for astatine slightest 2 days, the RSI speechmaking is considered to beryllium supra 70, which qualifies arsenic overbought; connected the different hand, an RSI speechmaking nether 30 is thought to beryllium oversold.

A beardown upward RSI momentum tends to constituent to an impending rally.

Look specifically for this benignant of RSI divergence: 2 lows, wherever the archetypal debased is higher than the adjacent low, followed by an RSI wherever a little debased is followed by a higher low. Such a divergence signifies a imaginable alteration successful momentum, meaning that a sizable upside could beryllium happening soon.

Bollinger Bands

Bollinger Bands tin beryllium utilized to find an asset's comparative precocious and debased terms implicit a acceptable play by utilizing a communal statistic metric known arsenic modular deviation.

By plotting bands 2 deviations supra and 2 deviations beneath a moving average, typically 20 days, traders tin usage humanities information to comparison it to the existent price.

Try utilizing Bollinger Bands to place breakout terms enactment erstwhile an asset’s terms moves extracurricular of the precocious oregon little bands. Prices adjacent the extremes of these bands tin beryllium different bully confirmation of a winning trade.

Moving Average Convergence/Divergence

The moving mean convergence/divergence (MACD) is simply a trend-following momentum indicator. The MACD enactment shows the narration betwixt 2 exponential moving averages (EMAs) — the quality betwixt the 12-day EMA and the 26-day EMA.

Finally and astir importantly, determination is the awesome enactment — a 9-day EMA of the MACD line. With the MACD, traders ticker the MACD enactment and the awesome enactment to spot if and erstwhile they transverse over.

When the MACD enactment crosses supra the awesome line, it is simply a bullish indicator that informs traders to see buying the asset, arsenic this signals a greenish candle could beryllium coming.

Conversely, erstwhile the MACD enactment crosses beneath the awesome line, it is simply a bearish indicator that informs traders to see selling oregon shorting the asset. Historically, this leads to a driblet successful plus value.

Using indicators to corroborate winning VORTECS™ Score alerts

Cointelegraph Markets Pro’s VORTECS™ Score is simply a quant-style indicator providing a “snapshot” examination betwixt existent and past marketplace conditions for a fixed crypto asset.

Its artificial intelligence-driven backtesting motor performs real-time investigation connected a fixed acceptable of quantitative factors to nutrient a numeric people that predicts erstwhile definite assets whitethorn beryllium owed an ascension successful price: a higher VORTECS™ Score means that existent marketplace conditions are bullish, portion a little people is bearish.

Many Cointelegraph Markets Pro traders usage a definite worth of the VORTECS™ Score arsenic a trigger for an entry. Many traders usage a worth of 75 and over, arsenic 75 is the worth astatine which the VORTECS™ enactment lights up greenish connected the Cointelegraph Markets Pro platform.

However, determination is simply a imaginable obstacle here: While the VORTECS™ Score offers institutional-grade penetration into imaginable plus movements, its predictability tin beryllium vastly improved by pairing it with confirmation from the indicators discussed above.

This rule is inherent to trading alternatively than the VORTECS™ Score — the much arguments that enactment a commercialized idea, the much apt it is to beryllium a winning trade.

For Cointelegraph Markets Pro traders who see a VORTECS™ Score of 75 arsenic a imaginable introduction trigger, here’s however 1 tin usage the indicators supra to corroborate commercialized opportunities:

1. Using MACD arsenic confirmation of a VORTECS™ Score trigger connected ETH/USD.

On Jan. 10, 2021, the VORTECS™ Score connected ETH/USD reached 81, triggering an introduction setup. An inspection of the terms enactment connected the illustration shows the trigger was preceded by a MACD accelerated enactment crossing implicit the awesome line, a bullish indicator.

By utilizing the MACD arsenic a confirmation tool, astute Cointelegraph Markets Pro traders could’ve utilized the VORTECS™ Score trigger to capitalize connected what was the commencement of the 2021 bull tally for Ether (ETH).

2. Using RSI arsenic confirmation of a VORTECS™ Score trigger connected DOT/USD.

On Sept. 21, 2021, the VORTECS™ Score connected DOT/USD reached 75, triggering an introduction setup. An inspection of the terms enactment shows that DOT/USD had conscionable displayed a bullish RSI divergence signal:

DOT/USD had acceptable little lows (indicated by the slanted bluish horizontal enactment connected the terms chart), portion the RSI had acceptable higher lows (indicated by the slanted bluish horizontal enactment connected the RSI chart).

By utilizing the RSI arsenic a confirmation tool, astute Cointelegraph Markets Pro traders could’ve utilized the VORTECS™ Score trigger to capitalize connected a adjacent 100% determination for Polkadot (DOT) successful 2 months.

3. Using Bollinger Bands arsenic confirmation of a VORTECS™ Score trigger connected DOT/USD.

Alternatively, traders utilizing Bollinger Bands could’ve besides utilized the indicator arsenic confirmation for the VORTECS™ Score trigger connected Sept. 21, 2021.

DOT’s terms illustration shows it dipped beneath the little bound of the Bollinger Bands connected the aforesaid time the VORTECS™ Score was triggered, providing contiguous bullish confirmation for the trade.

Cointelegraph’s Markets Pro provides traders casual entree to institutional-grade tools similar VORTECS™ Score triggers and accepted method analysis. Paired together, these tin beryllium the gathering blocks of creating high-quality, high-probability trades.

See however Cointelegraph Markets Pro delivers market-moving information earlier this accusation becomes nationalist knowledge.

Cointelegraph is simply a steadfast of fiscal information, not an concern adviser. We bash not supply personalized oregon individualized concern advice. Cryptocurrencies are volatile investments and transportation important hazard including the hazard of imperishable and full loss. Past show is not indicative of aboriginal results. Figures and charts are close astatine the clip of penning oregon arsenic different specified. Live-tested strategies are not recommendations. Consult your fiscal advisor earlier making fiscal decisions.

All ROIs quoted are close arsenic of February 14, 2023…

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