Get up to date on the latest analysis and trading tips with our Crypto update week 3
- Frax Share outperforming Bitcoin?
- Bitcoin is currently at a resistance, which the price will need to overcome for the rally to continue.
- Trading SHIB with the RSI like a pro.
- Trading SAND with the DEMA crossover.
Is Frax Share outperforming Bitcoin?
Frax Share (FXS) is one of the few altcoins seriously outperforming Bitcoin. What is even more impressive is that it is doing this at a time when Bitcoin is outperforming most altcoins. Let’s take a closer look at the situation!
FXS has been mainly between $4-$8 in the summer and autumn of 2022, while Bitcoin was stuck between $18,000-$25,000. While Bitcoin was dragged to new lows following the FTX-induced crash in November 2022, FXS was not! The $4 support level held firm.
Following this, we had a strong rally of 130%, which broke above the $8 resistance. This is significant, as the $8 resistance of FXS is the equivalent of the $25,000 resistance of Bitcoin, and Bitcoin is currently pretty far from reaching $25,000.
If FXS continues its current rally, the next resistance level stands between $14-$16. This level is around 50%-70% higher than the current level, providing a decent opportunity for profit. However, since FXS still follows Bitcoin, it will probably need to have Bitcoin continue its current run, possibly to $25,000 or close to it.
Trading FXS: An indicator that appears to work well on FXS on the daily chart is the MACD. Following the MACD signals and swing trading FXS, has proven to be a better strategy than a simple buy and hold thus far.
Bitcoin at Resistance Looking For a Breakout!
This past week has been great for Bitcoin, as the coin gained 22% in just 7 days. However, it is currently at a resistance, which Bitcoin will need to overcome for the rally to continue.
This resistance level was the last high made last year before the FTX-induced crash. It has previously acted as a resistance 4 times between June and November 2022.
If Bitcoin manages to break above this resistance level, the next target stands at $25,000, which is the highest level reached since June 2022. This is 20% higher than the current level.
Usually, when the price is trending strongly, and it suddenly stops at a resistance, if it is unable to break that resistance quickly, it will start dropping. This is because it starts to lose momentum, and as we know, when a coin starts losing its momentum, it usually changes directions.
If Bitcoin suffers a reversal, we could see the price drop to $18,000. This level acted as a support throughout the entire second half of 2022, preventing the price from going lower. Apart from this support level, the 30 EMA is usually a decent mobile support and resistance, which keeps the price from going above/below it.
Looking Ahead: If the price breaks below $18,000 and the 30 EMA, we finally have the $15,500 support level. However, it is less likely we will end up all the way there. This is because when looking back 4 years ago, we had a similar pattern. Bitcoin had a small uptrend and then continued its consolidation phase for two more months before starting a bull run. However, it never reached its lows again. Therefore, if history is to repeat itself, we won’t fall back to $15,500 unless some bad news occurs, like another exchange failing.
Trading SHIB with the RSI like a pro.
Shiba Inu (SHIB) is a popular coin that has gained a lot of attention recently. The coin experienced a tremendous price increase in the last bull run, which makes it an excellent opportunity for traders to profit. However, to make a profit, it’s essential to have a great strategy in place to maximize your returns. One such strategy is trading SHIB with the Relative Strength Index (RSI).
The Relative Strength Index RSI
The RSI is a popular technical indicator used in crypto trading to measure the strength of a coin’s price action. It compares the magnitude of recent gains to recent losses in an attempt to determine the overbought and oversold conditions of an asset. The RSI is a momentum oscillator that ranges between 0 and 100.
When trading SHIB with the RSI, the idea is to buy when the RSI is oversold and sell when it’s overbought. When the RSI falls below 30, it’s considered oversold, and it’s usually a good time to buy. Conversely, when the RSI rises above 70, it’s considered overbought, and it’s usually a good time to sell.
Best RSI Settings For SHIB
The classic RSI settings may not be the best for SHIB. Therefore, we have optimized them and found the following to be much more suitable:
- Chart period = 30 minutes
- RSI Period = 10
- Overbought = 40
- Oversold = 26
In our backtest, we took into account a 0.1% fee per trade and traded each time with the entire account. The strategy brought a profit of 189% from May 2021 until January 2023. The buy-and-hold return for the same period was about -50%, showcasing that this strategy could work very well in a bear market.
While this may sound impressive, past performance does not guarantee future success.
Trading SAND With the DEMA Crossover
Trading SAND with the DEMA (double exponential moving average) crossover is a strategy that can be used to beat the market. Let’s learn more about it!
Understanding the DEMA
The DEMA crossover strategy uses two DEMA lines: a short period line and a long period line. The short period line represents the short-term trend of SAND, while the long period line represents the long-term trend.
When the short-period DEMA line crosses above the long-period DEMA line, it is considered a bullish signal, indicating that the short-term trend is becoming stronger than the long-term trend and that it may be a good time to buy SAND. Conversely, when the short-term DEMA line crosses below the long-term DEMA line, it is considered a bearish signal, indicating that the short-term trend is becoming weaker than the long-term trend and that it may be a good time to sell.
Best DEMA Crossover
We have tried multiple lengths for the short and long-term DEMA lines to see which ones work best. In our backtest, we took into account a 0.1% fee per trade, but no slippage was taken into account. All the trades were taken with the entire account.
The best DEMA lengths we found are:
- Chart Period = 4H
- Short Period DEMA = 5
- Long Period DEMA = 30
This resulted in a 3,592% profit, while the buy-and-hold profit was only 1,431%. While this is much better than the buy and hold, it’s important to keep in mind that past performance does not guarantee future success.
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Is Frax Share outperforming Bitcoin? | And More in This Weeks Crypto Update. was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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