Crypto currency and bitcoin, in particular, are the most volatile financial instruments for today. Races of 10-20% up or down – a common thing for these assets. And sometimes some coins per day grow hundreds of times. In addition, there are other features that need to be considered for cryptocurrency trading.
Often traders who switch to the crypt from currency or shares begin to lose money, as their trading systems simply do not fit. To avoid such an error, today we will consider trading strategies for bitcoin. More precisely, we will find out which factors influence the price change more, and you will be able to independently develop your trading system.
Crypto currency and technical analysis are incompatible?
Often experts say that technical analysis is not applicable to cryptocurrencies. Is it really? If we are talking about tokens that only recently appeared, yes. But today we are talking about bitcoin, the first digital coin in the world. It already exists for 8 years and some regularities in the price movement can be found on the charts. Or maybe we are wrong? In general, let’s open the schedule and check.
That’s how the price of the cue ball changed in December 2017. Surely you remember when the coin jumped in price from $ 10,000 to $ 17,000 a week, and then touched the $ 20,000 level for the first time. And then a serious correction began (at the time of preparation of the material, it still continued) to 13 000 USD. Or, maybe this is the beginning of the first downtrend? However, now, when you read the article, you already know that this, the correction or reversal of the trend was at the end of December.
So, let’s try to use the standard versions of technical analysis on the chart. Let’s start with the trend lines.
We see that in this particular case the trend line worked perfectly. The price rebounded from the border upwards, when we expected this. And if you continue to believe the instrument, the price should rebound again in the near future.
But you probably know the main disadvantage of trend lines. Sooner or later, most support levels become resistance levels and vice versa.
Now let’s set the Fibonacci levels. We do not know how you feel, but it seems to us that this is one of the best tools for graphical analysis of the market.
Let’s count, that falling of quotations is a beginning of a descending trend. Let’s set the lines from the maximum to the first rollback.
As you can see, the levels also worked perfectly. The price fell back to 38.2, and then continued to move down. To verify Fibo’s accuracy, let’s build the correction levels again.
Thanks to the Fibonacci levels, we ourselves have repeatedly determined the correction levels for the cue ball, so we can say that they work.
If you have your own strategy for trading on assets that are familiar to all, try it on the crypt. We agree that quotes of digital coins do not primarily depend on technical analysis. But we do not agree that technical analysis does not help traders at all.
You can develop an effective bitcoin strategy based on indicators and graphical analysis tools. And it is fully capable of making a profit.
Fundamental factors are the basis of the bitcoin trading strategy
For medium and long-term trading, it is certainly better to rely on fundamental factors. News of exchanges, various countries on the prohibition or authorization of crypto-currencies, forthcoming forks and a number of other events are the main engine of prices for bitcoin and other crypto-currencies.
Let’s see why the last major correction began. In addition, that the coin can not constantly grow, because buyers sooner or later think: “Enough, at this price I will not buy it.” Although, of course, there are those who buy a cue drum at any price. We do not recommend doing this.
So, before the correction began, there was a rapid growth. The price of the coin grew, and the news about the release of bitcoin futures contributed to this. Of course, the futures themselves do not directly affect the quotes of the world’s key crypto currency in 2017. But this is a serious psychological factor. The largest US stock exchanges are beginning to believe in the cue ball. So, you need to invest. That’s what most people think. Investors and traders begin to invest in coins. Capitalization is growing, the price accordingly also goes up.
Then there were rumors that the coin should collapse. The same said the director of a large investment company Pantera Capital Dan Marhad, saying that the cue ball would collapse by 50%. In principle, it happened. The crowd began to merge the coin, at some point the quotes almost reached the mark of $ 10,000, but then rebounded to 13,000.
Today, the volatility of the market is really high, and in some cases technical analysis does not give the desired result. Today, most of the strategies for trading in bitcoin are based on working with news. Watch the news from the world of blockbuster and finance. Then your predictions will be more accurate.
But then again, we do not say that technical analysis. At least, Fibo levels work fine.
Keep up with trends and market development
Recently, futures for the cue ball have been launched. Now this event will permanently have an indirect impact on the quotes of the crypto active. Therefore, it is necessary to monitor the schedule of not only coins, but also futures.
In order to create a profitable trading strategy for bitcoin, one must constantly be aware of not only news, but also the emergence of new trends in the crypt world.