Chart
The market is peaking again. Most of the altcoins have been having double-digit increases and most of them have outperformed Bitcoin, which has led to a couple of weeks of good alt trading.
This week’s analysis shows the Bitcoin’s bull run during the last month. It’s possible to separate two different clear phases in the chart: a range and an uptrend. During the whole month of December, the market was ranging between $6,700 and $7,700. However, the bulls took over the market in 2020 and drove the BTC price up more than 50%. What a beginning of the year of the halving.
Designing your automated strategy
As we have previously said, this chart shows two clear phases, a range and a trend. Therefore, in order to trade in the current scenario, we need indicators that would also know how to differentiate between these two phases. Therefore, we have selected the ADX, which is a volatility indicator that will remain low when the price is ranging (low volatility) and increases when the price is trending (higher volatility).
As we can see in the beginning of the chart (December), the ADX line (red line) remains below its threshold when the price is ranging. When this happens, the indicator signals “Unconfirmed” and won’t let other indicators (Stochastic in this case) open a position even if they signal a buy. Nevertheless, when the ADX line is above the threshold, the indictor becomes “Confirmed”, and if the Stochastic signals a buy, the trading bot will open the position.
In the chart, you can see which are the positions that will not be opened by this strategy and the positions that will be opened.
The market is peaking again. Most of the altcoins have been having double-digit increases and most of them have outperformed Bitcoin, which has led to a couple of weeks of good alt trading.
This week’s analysis shows the Bitcoin’s bull run during the last month. It’s possible to separate two different clear phases in the chart: a range and an uptrend. During the whole month of December, the market was ranging between $6,700 and $7,700. However, the bulls took over the market in 2020 and drove the BTC price up more than 50%. What a beginning of the year of the halving.
Designing your automated strategy
As we have previously said, this chart shows two clear phases, a range and a trend. Therefore, in order to trade in the current scenario, we need indicators that would also know how to differentiate between these two phases. Therefore, we have selected the ADX, which is a volatility indicator that will remain low when the price is ranging (low volatility) and increases when the price is trending (higher volatility).
As we can see in the beginning of the chart (December), the ADX line (red line) remains below its threshold when the price is ranging. When this happens, the indicator signals “Unconfirmed” and won’t let other indicators (Stochastic in this case) open a position even if they signal a buy. Nevertheless, when the ADX line is above the threshold, the indictor becomes “Confirmed”, and if the Stochastic signals a buy, the trading bot will open the position.
In the chart, you can see which are the positions that will not be opened by this strategy and the positions that will be opened.