Since Bitcoin, like other cryptocurrencies, is one of the financial instruments that show great price fluctuations, talking about the Bitcoin trading strategy may be a bit tricky due to its high volatility.

 

Which may necessitate showing unconventional trading techniques at times, as well as its novelty may pose another trading challenge because technical analysis mainly depends on trying to extrapolate the future by reading the past.

 

The basic principle of market mood focuses on that traders who are exposed to similar market conditions may show similar mood patterns even if the time period varies, so how can we rely on the history of price movement to extrapolate the future, which is a modern financial tool that did not form enough realistic patterns to rely on?

 

Bitcoin trading strategies for beginners

According to previous data that distinguish digital currencies, including Bitcoin, from any other financial instrument, these estimates confirm the importance of the developed Bitcoin trading strategy.

 

Which uses a number of technical techniques that combine well-known trading strategies such as swing trading, day trading or price action trading with well-known technical patterns that may form in the Bitcoin chart much faster than other financial instruments as a result of the crazy price movement in Some times.

 

Which constitutes a great advantage that attracts the interest of many traders who wish to benefit from this price movement, which increases the number of traders and thus more fuel for the price movement as a result of the growing conflict between the forces of demand and supply.

 

Time frame

Hourly time frames and above.

 

Financial instruments

It can be applied to all cryptocurrency contracts, giving more accurate results on bitcoin contracts.

 

Technical techniques used

• The exponential moving average of the 34-period EMA34.
• RSI with default settings.
• MACD indicator with default settings.
• Technical models of all kinds.

 

Bitcoin trading strategy

Due to the high and irrational volatility at times in the price movement of financial instruments for cryptocurrencies, the principle of the strategy depends on the moving averages to determine the trend, and the MACD indicator to confirm the trend.

 

Also, the relative strength of observing the overbought / oversold areas, patterns and technical patterns to confirm trends, especially since the price movement of Bitcoin may form rare technical patterns continuously more than other tools as a result of the conflict between the forces of demand and supply.

 

Buy deals

• The first sign of an uptrend is when the price action is above the EMA34.
• The second signal is when the MACD forms a band above the zero level.
• When the RSI histogram breaks through the level of 30 from the bottom up and on the condition that all conditions are met without the RSI histogram reaching the top of the 70 level.
• The last confirmations of the buying decision are taken when a reversal pattern in the bearish trend or a continuation pattern in the uptrend is formed, in order to enter a long position as soon as the pattern is formed.
• As shown in the attached image, the presence of the hammer pattern that forms at the end of the downtrend as a reversal pattern indicates the victory of demand forces over supply forces as a start to form a new bullish trend.
• Any of the other technical analysis techniques can be used to set stop loss and take profit levels.

 

Sales deals

1. The first sign of a bearish trend is when the price action is below the EMA34.
2. The second signal is when the MACD indicator forms a band below the zero level.
3. When the RSI histogram breaks through the level of 70 from top to bottom and provided that all conditions are met without the RSI histogram reaching the lowest level of 30.
4. The last confirmations of the decision to sell are taken when a reversal pattern is formed in the bullish direction or a continuation pattern in the bearish direction, to enter a short position as soon as the pattern is formed.
5. As shown in the attached image, there is a shooting star that forms at the end of the bullish trend as a reversal pattern that indicates the victory of supply forces over demand forces as the beginning of a new bearish trend.
6. Any of the other technical analysis techniques can be used to set stop loss and take profit levels.

 

Trading with Technical Analysis

Technical analysis is also a great source of bitcoin trading ideas. We do not recommend scalping, in other words trading on shorter time periods.

 

It is better to focus on timeframes larger than H1 as they allow you to get the most out of the market.

 

Bitcoin tends to move according to the trend. The best strategy is to choose a trend-following system when trading bitcoin. It may be as simple as trading using a moving average or a group of moving averages.

 

Trading on the news

Bitcoin is not usually affected by news in the economic calendar. You have to follow specific Bitcoin news. This news has a greater impact than traditional economic news such as the US non-farm payroll, for example.

 

For example, if you know that a large fund has invested hundreds of millions in bitcoin, you should consider buying the digital currency over the next few days. If a large cryptocurrency transaction gets hacked, you should consider selling Bitcoin.