Have you ever considered comparing a digital currency price chart to another asset?
You’ve undoubtedly looked at stock and commodity charts before.
Examine any cryptocurrency price chart, whether for Bitcoin, Litecoin, Ethereum, or the rise and fall of any cryptocurrency. Is that similar to the patterns you see in stocks?
You can delve further into the price chart if you’d like. The volatility in the digital currency market can benefit both traders and investors. Let’s examine how this volatility could potentially serve as a valuable source of capital for both cryptocurrency traders and investors. What’s going on here? Look at this more closely.
Crypto Trading Profit
Please see the chart below. A monthly chart of Litecoin.
Please pay close attention to the boxes in the price chart. Investments have experienced numerous multipliers over time.
This is not to imply that stocks or other assets do not experience such fluctuations. However, such volatility is common in the cryptocurrency market.
LITECOIN / DAILY CHART
An asset’s long-term undervaluation can result in a price increase. The chart shows that every time the price fell after a big decline, there was a big rally.
Crypto Price Chart and Profitable Trading Strategy
Let’s take a closer look at the price chart.
You can frequently see price drops from the top. In the latter case, track the price for an extended period of time as it moves around almost the same level.
You can also observe price divergence here. Subsequently, the price surpassed the previous low point. This suggests a long-term increase in price.
ETHEREUM / DAILY CHART
A specific pattern appears on the chart prior to a significant price movement. Elliott wave theory refers to this pattern as a motive wave.
On a smaller scale, we look for an impulsive wave, which is a typical motive wave pattern on the chart.
Profitable Trading Strategy with Elliott Wave Chart Pattern
Let’s take a more in-depth look at the price chart.
I am confident that you will notice the appearance of five waves, indicating a price increase. After a correction, a significant upward movement in price is visible. (Chart below)
You’ll be even more surprised as you get closer. Observe that the price increased by at least 161% after rising in the initial phase, surpassing that level in the subsequent phase. Fibonacci levels suggest that the price may surpass 261%, 361%, 461%, and other figures. In essence, after meeting all conditions, exercising some patience may result in reaching a predetermined target.
Trading in Impulse Wave
To determine whether an impulse pattern has formed following the lower-high crossover on the price chart, one must adhere to specific Elliott Wave principles.
First, Wave 2 should never drop below Wave 1’s starting point. Second, Wave 3 cannot be the shortest of the waves. Thirdly, the price chart should show Waves 2 and 4 at different levels. In other words, waves two and four should not overlap. Finally, we need to extend one or more waves. This implies that extending at least one wave between Waves 1, 3, and 5 signifies a prolonged upward or downward movement.
BITCOIN/ DAILY CHART
The example above demonstrates that wave 3 is an extended wave. In comparison, waves 1 and 5 appear to be shorter.
In an extended wave, all sub waves are typically visible. Waves 1, 3, and 5 exhibit distinct trends.
However, price corrections are evident in waves 2 and 4.
Price Correction and Trade Entry
Following the formation of this impulse on a small scale, the price enters a corrective phase, typically retracing half of the distance between Waves 1 and 5. Frequently, after a 38% retracement, the price begins to rise, as shown in the chart above.
During this correction, it is best to wait patiently for the appropriate moment.
Profitable Strategy in Crypto Trading
When the price begins to move above the previous impulse near the end of the correction, clear opportunities appear on the chart.
You can also view the chart of another cryptocurrency or a different timeframe. I’m confident you’ll find similar profit opportunities there.
The profit potential is straightforward in this case. After a market reversal, you can use the distance of the first impulse as a benchmark for future growth. Setting this distance to 100% indicates that the price movement following the correction could be at least 161%. Following this, the price typically follows the Fibonacci sequence.
This specific pattern in the Elliott wave is easy to recognize.
It begins with a period of below-level reversals. Then there’s the impulse. Significant profits can be expected if the impulse’s conditions are met.
Patience Game and Trading
In the world of cryptocurrency investing, the Elliott Wave strategy, a powerful analytical tool, emphasizes patience. To be successful with this strategy, you must wait for distinct wave patterns to form, which mirrors the disciplined approach to holding positions during market fluctuations.
The key is to recognize that each wave has its own timeline, requiring patience to determine the best entry and exit points. Booking profits occurs at the end of a full wave cycle, emphasizing strategic and measured patience in order to align with the Elliott Wave theory’s rhythmic patterns.
Final Thoughts
Finally, the Elliott Wave strategy emerges as an appealing option for cryptocurrency investors seeking a refined and systematic approach. Based on wave patterns and market psychology, it offers a structured decision-making framework.
Patience, an important component of this strategy, is useful for capitalizing on market cycles and determining entry and exit points. Understanding and applying Elliott Wave theory enables investors to navigate the volatile crypto landscape with greater precision, encouraging a strategic and disciplined approach to cryptocurrency investment.
Disclaimer
This post is just for informative purposes and does not constitute financial advice. Trading and investing involve risk, and past performance does not guarantee future results. Before making an investing or trading choice, readers should undertake their own research and evaluate their own circumstances. The author and platform accept no responsibility for any financial losses or damages stemming from the use of this material. Receive personalized advice from a qualified financial advisor.
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