- Bitcoin’s price has been in a tight range since summer season
- A range can be traded successfully using the RSI
- Speculators ought to use small-size positions to keep away from being caught on the improper facet of the market
Bitcoin buyers, significantly hodlers, have had a laborious time throughout the summer season months. Literally, Bitcoin’s price didn’t go anyplace.
Sure sufficient, the rally in the early months of the yr greater than compensates buyers holding the cryptocurrency in the future. But comparable (or extra) positive aspects might be achieved by speculating on short-term market actions.
This is true when and if the dealer can determine durations when the market is in consolidation prefer it was throughout the summer season months. In such occasions, the best solution to commerce a market is to make use of an oscillator and commerce overbought and oversold ranges.
The hottest oscillator is the RSI (Relative Strength Index), and its interpretation is easy. More exactly, each time the oscillator reaches values above 70, it’s stated that the market is overbought and may decline. On the opposite, when the RSI reaches values under 70, it’s stated that the market is oversold, and the price ought to improve.
Such a easy technique works when the market is in a range. However, it can be devastating for the buying and selling account when it tendencies.
Hence, the secret’s to determine a range. Once recognized, it really works as easily as attainable – simply have a have a look at the way it carried out on Bitcoin throughout the summer season months.
Trading Bitcoin when the price is in a range
Since June, the RSI provided the good sign to commerce Bitcoin. It labored flawlessly, as mirrored on the chart under – and nonetheless works.
It will most definitely nonetheless work if the range continues.
However, as soon as the range ends, the market might keep in overbought and oversold territory greater than a dealer can keep solvent. Therefore, if anybody speculates on such ranges, they need to do it with small-size positions and tight cash administration guidelines.
