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Technical analysis (TA) has been used to trade crypto since its inception. Traders claim that through careful analysis of historical data and focus on price, volume, and related indicators it is possible to identify patterns and predict outcomes. Here are a number of key indicators and mechanics commonly used for trading crypto.
Technical Analysis Is Controversial
There are a number of ways to use TA to trade cryptocurrencies. Many experienced day traders have been applying Bollinger Bands, Moving Average Convergence Divergence (MACD), Stochastic, the Detrended Oscillator, and Fibonacci Retracement in a bid to gain insights into where the market will go next.
Some are more sceptical of TA. Angus Champion de Crespigny, an advisor to blockchain projects and a former EY blockchain lead, says that when it comes to TA, some methods can be controversial in traditional markets, let alone a relatively new market such as crypto.
“Considering we are dealing with a brand new market, I think we should be careful with anyone stating with confidence that they know what the price will be in the short term. Maybe I’m missing something but I am curious how TA theses for this market could have been proven when the market is still evolving on a monthly basis,” said Crespigny.
In favor of using TA in cryptocurrency trading is Alexey Markov, a trader at United Traders based in Moscow, Russia. He explained that when it comes to TA, almost anything can work in any markets. The same technical analysis can be applied across different assets in both forex and crypto markets. Indicator-based trading means the trader will rely on indicators to analyze the price and provide trade signals. These alert the trader as to whether now might be a good time to enter or exit a position.
There are a number of key indicators to consider when trading crypto. Markov said: “Many traders make use of indicators during their activities, but our traders, early in their careers, tried out a great many indicators and most traders then refused to use them again except for volume – maybe a few used Moving Average – 200 and 50 for example – and even then only on daily charts.”
Technical Analysis Enables Visualization
Be warned though: indicators don’t forecast prices but simply enable visualization in charts and show some median figures where the stock was located during the period under scrutiny. Markov explained that if prices rise on trend then Moving Averages go up, the price gains momentum and the Relative Strength Index also rises. This build up can be demonstrated by green and red candles. For many traders it is convenient to view the pace of price-change in different formats. This all boils down to a question of taste and preference, explained Markov.
There is also the risk that too many indicators will muddy charts with excess overlays and make if difficult to interpret the information. According to Markov, it is best to limit yourself to the minimum possible number of indicators and use them over longer timeframes to avoid being misled by signals. “If there’s a trend in the market, it doesn’t matter what indicators of any sort you could be using, then it’s easy to make money. If it’s a side market, no indicator will save the trader, so you’d better take a break from trading or seek out other assets,” he said.
Gauging Volatility Using Bollinger Bands
Bollinger Bands are a type of statistical chart characterizing the prices and volatility over time and were developed by John Bollinger in the 1980s. According to Bollinger, periods of low volatility are often followed by periods of high volatility.
Markov explained: “Bollinger Bands primarily show the expected volatility range of an instrument based on its previous performance shown in the form of lines around the moving average that illustrates the range in within [which] this stock ‘should’ operate. It’s believed that if it exits this range, the trend will still continue very often, the narrower the range, the stronger the movement will be.”
According to Markov, shunts in the vicinity of 6,000 on BTC provide a good example of going outside this range. “When at the opening of the year the range was very broad, the exits from it gave very little information. Yet all of this goes to prove the well-known truth that after a price is wedged into a narrow price range, a powerful exit from it often follows. This can be seen on even the simplest chart without using indicators,” explained Markov.
Moving Average Convergence Divergence
MACD is a trading indicator method used in technical analysis of stock prices and was created by Gerald Appel in the late 1970s. According to Markov, MACD will show the trader the difference between two shifting averages.
Markov explained: “The larger the indicator value the stronger the ongoing trend. At the moment when it is suspended, the shift begins converging as the indicator nears zero. This is considered to be an input signal, while the indicator crosses the zero line is a more reliable although much slower signal. It’s an indicator more suited for trading on trends.”
Stochastic is an indicator which shows the level of overbought or oversold conditions for the period in question. Below is an ethereum graph from 2017 when Markov saw entry points using this indicator.
Markov said: “The higher or lower this is to the closing prices, the higher or lower the indicator will be. The classic overbought or oversold level is thought of as 80% and 20% – so when crossing this guideline or returning back it ought to be either entering or leaving this position. Here the logic runs that when an asset closes extremely low, relative to recent periods, the potential for further worsening is very small and sales may soon end.”
Finally we have the Fibonacci Retracement. In TA, the Fibonacci retracement means creating taking two extreme points (major peak and trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.
Markov said: “It is believed that there is much in the world around us that owes its existence that can be described with these numbers. Traders have concluded that trends in the financial markets are undermined by general laws of nature.”
Although the study of Fibonacci retracements (or “fibs”) is useful in identifying support and resistance levels, its efficacy in deriving actionable insights is disputed by many traders. Fibonacci remains an esoteric but intriguing TA tool.
Disclaimer: Bitcoin.com trading articles are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the money.
What techniques do you use when trading cryptocurrency? Let us know in the comments section below.
Images courtesy of Shutterstock and United Traders.
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The post Analysis: Using Technical Indicators to Trade Crypto in 2019 appeared first on Bitcoin News.
China’s trade surplus with the U.S. hit a fresh record last year, as robust American demand for Chinese goods undercut the Trump administration’s tariff offensive aimed at narrowing the countries’ lopsided trade gap.
WSJ.com: What’s News Asia
Back in October news.Bitcoin.com reported on the influx of development tied to Drivechain, a project initiated by software developer Paul Sztorc. At the time we also covered the project’s extension applications coded by the programmer Andreas Brekken. One of those applications Brekken conceived allowed any Drivenet coins to be swapped between any blockchain protocol. On Friday, an application called Sideshift.ai was used to demonstrate a bitcoin core (BTC) to tether (USDT) swap using the Lightning Network.
Jan. 11 saw a demonstration of Sideshift.ai, an application that allows users to swap cryptocurrencies between chains. Sideshift was first revealed last year by Andrea Brekken among the suite of applications he created for the Drivechain project. Brekken is the chief executive officer of the review site Shitcoin.com and the infamous coder who once held the most BTC ($ 220,000) on the Lightning Network last year. The Sideshift platform allows people to convert coins for a small fee with a processing time of under five seconds.
In the demonstration, Sideshift, processes a swap between BTC held on the Lightning Network and tether (USDT) using the Eclair mobile wallet for Android. At the moment the Sideshift application is in its very early stages, but users can experiment with the “test pilot stage.” However, in order to access the testing stage, a special code is required and Sideshift’s Twitter handle will only give codes to eager testers who have a Bitcointalk.org account that’s more than two years old.
Furthermore, the Sideshift application is not accessible to residents living in North Korea or the United States. Of course, the U.S. ban is likely due to the overreaching financial laws in the country. U.S. law enforcement agencies and regulators could potentially prosecute individuals and organizations by threatening them with criminal charges for performing financial transactions.
Cross-Chain Swapping Platforms Are Still Very Experimental
In order to view Sideshift, we changed our proxy to an EU-based server and got a glimpse of the platform that operates similarly to Shapeshift, but without involving know-your-customer (KYC) guidelines. Looking at the past transactions recorded on Sideshift’s main page, testers have been swapping very small fractions of cryptocurrencies.
The platform shows all the currencies that can be swapped, which include BCH, BTC, LTC, ZEC, USDT, XMR, DASH, ETC, ETH, DAI, and SPANK. Sideshift further lists the conversion rates for each digital asset paired against the other listed coins. At the time of publication, the last shift was seven hours ago using the Lightning Network with 0.0003 BTC for 0.008601 ETH. There’s also a swap between 0.0149022 BTC and 0.9805 ZEC that doesn’t involve the Lightning Network.
Over the last few months, after Shapeshift adopted KYC, cryptocurrency enthusiasts have been in search for platforms that offer anonymous crypto swaps. Since then a bunch of digital asset ‘shifting’ applications have popped out of the woodwork. Cross-chain atomic swaps have also been a trending topic among digital currency proponents as many veterans have little trust in third party exchanges. Even though Sideshift does provide quick cross-chain trades, testers should remember the platform is still in its infancy. So those who do obtain the access code from Sideshift administrator should probably only use small fractions of cryptocurrency.
What do you think about the Sideshift.ai application? Let us know your thoughts about this subject in the comments section below.
Disclaimer: Readers should do their own due diligence before taking any actions related to the mentioned company or any of its affiliates or services. Bitcoin.com and the author are not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. This editorial is for informational purposes only.
Image credits: Shutterstock, Twitter, and Sideshift.ai.
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The post Sideshift App Demonstrates a Trade Between Lightning Network BTC and Tether appeared first on Bitcoin News.
In recent cryptocurrency exchange news, Huobi’s EOS exchange has entered trial operations, Sharespost has facilitated a secondary trade of the BCAP security token, and Bithumb has obtained South Korean Information Security Management System certification.
Huobi Launches Trial of EOS Exchange
In the last 24 hours, Huobi has announced the company’s EOS exchange has entered trial operations, which includes support for EOS/BTC, EOS/ETH, and EOS/USDT pairings. The exchange will be launched and operated by Huobi Pool, the mining arm of the company.
Earlier this month, Cao Fei, the chief executive officer of Huobi Pool, stated: “As an EOS super node, Huobi Pool has placed [EOS] ecological development high on its list of priorities. Launching this EOS exchange is simply the next logical step in our support.”
On Dec. 28, Huobi also announced support for EOS on the Huobi Derivative Market. The EOS derivative contracts support leverage of up to 20x, with the platform imposing maker fees of 0.02 percent and taker fees of 0.03 percent.
Sharespost Facilitates Secondary Transaction for BCAP Security Token
On Jan. 10, the Sharespost alternative trading system announced that it had executed its secondary transaction of Blockchain Capital’s BCAP security tokens.
The chief executive officer of Sharespost, Greg Brogger, described the transaction as “an important milestone for the digital securities ecosystem,” emphasizing the company’s expectation that tokenized securities will “join preferred and common stock as the mainstays of the private capital market.”
While the company has described the transaction as the first secondary transaction involving BCAP, alternative trading system Openfinance launched support for BCAP trade during December 2018.
Sharespost will also provide secondary liquidity and custody services to users of its marketplace. Currently, Sharespost only support Over-The-Counter (OTC) trade of security tokens, but the company has announced its intention to later support real time trading via digital order book.
Bithumb Obtains Certification from Korea Internet & Security Agency
Bithumb, the largest cryptocurrency exchange by reported trade volume, has received Information Security Management System (ISMS) certification from the Korea Internet & Security Agency (KISA).
According to local news, ISMS is the “highest” ISMS certification system in South Korea, comprising “12 items from 5 stages of information security management processes and 92 items from 13 areas related to information security measures.”
Last year, South Korea’s government mandated that cryptocurrency exchanges receive more than one million visitors and generate more than 10 billion Korean Won (nearly $ 8.95 million) in profit within a three-month period to obtain ISMS certification.
What is your reaction to the purported promise of security tokens? Share your thoughts in the comments section below!
Images courtesy of Shutterstock
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The post Exchange News: Huobi Trials EOS Exchange, Sharespost Enables Security Token Trade appeared first on Bitcoin News.
China and the U.S. are set to hold a round of higher-level talks to resolve the trade conflict, with Chinese Vice Premier Liu He scheduled to visit Washington in late January—though the plan could be delayed by the U.S. government shutdown.
WSJ.com: What’s News Asia
The U.S. and China wrapped up their first face-to-face trade negotiations since a temporary tariff truce was declared last month, making progress toward an agreement but leaving the thorniest issues to be resolved in higher-level talks.
WSJ.com: What’s News Asia
Stocks around the world built on their early 2019 rally Wednesday after negotiators from the U.S. and China extended their trade talks to a third day, which investors took as a sign the discussions were productive even though no major breakthroughs have been announced.
The S&P 500 index climbed…
Stocks soared Friday on Wall Street, reversing the big losses they suffered the day before. The major U.S. indexes all jumped more than 3%, the latest twist in a wild three months for markets.
Hopes for progress in the U.S.-China trade dispute, a strong report on the U.S. jobs market and encouraging…
If a deal isn’t reached, free trade between the U.K. and European Union will end and customs checks will kick in for the first time in 45 years. Officials warn that could cause huge delays that could create one of the world’s biggest traffic jams.
WSJ.com: What’s News Europe