Cryptocurrency Momentum Strategy

Implementing the cryptocurrency momentum strategy that works can be a great way to build and profitable manage your crypto trading account.

We believe that a momentum strategy has the ability to minimize risk and improve your general earnings.

We are going to analyze core cryptocurrency market principles, one of which is that momentum precedes price.

This is to say, our momentum strategy is somewhat like a trend following system.

However, our system will help us determine when to buy and sell a listed cryptocurrency in an easy fashion.

This is so because cryptocurrencies with positive momentum tend to have positive returns in the foreseeable future, and vis-à-vis for those with negative momentum.

Trade Setup 

MT4 Indicators: Bollinger Bands.ex4 (Default Setting), Momentum_Histo.ex4 (Inputs Variable Modified; Indicator Period=28)

Suitable for: Scalping, day trading, swing trading, investing

Trading Time: 24/7, Around the Clock

Cryptocurrency: Any (Bitcoin and Altcoins)

Timeframes: Any

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Download the Cryptocurrency Momentum Strategy That Works

Buy Trade Example: DASH/USD (DASH / US Dollar), H4 Chart

Fig. 1.0

Strategy Rules

Buy Signal

Open a buy trade if the following trading conditions appear on the crypto chart:

  • If price opens and closes above the middle medium sea green line of the Bollinger Bands Metatrader 4 currency indicator as illustrated on Fig. 1.0, Dash market price is said to be pressured higher, therefore a trigger to go long on the selected cryptocurrency.
  • If the green histograms of the Momentum_Histo custom indicator get displayed above the 0.00 horizontal level as depicted on Fig. 1.0, Dash price is said to be driven to the upside i.e. a trigger to buy the designated cryptocurrency.

Suggested Stop Loss for Buy Trade: Place stop loss some points below support.

Suggested Exit Strategy/Take Profit for Buy Trade

Exit the buy trade if the following trading conditions appear on the chart:

  • If while a bullish trend is running, the Dash price is seen to open and close below the middle medium sea green line of the Bollinger Bands indicator (see Fig. 1.0), the overall Dash bullish market sentiment is said to be weaning, as such an exit or take profit is recommended.
  • If the Momentum_Histo custom indicator pops up a red histogram that realigns to form below the 0.00 horizontal level, it is pointing to diminishing bulls power, thus an exit or take profit stance is advised.

Sell Signal

Open a sell trade if the following trading conditions appear on the crypto chart:

  • If price opens and closes below the middle medium sea green line of the Bollinger Bands currency indicator as shown on Fig. 1.1, Dash market price is said to be dragged lower, thus a trigger to go short on the cryptocurrency of interest.
  • If the red histograms of the Momentum_Histo custom indicator get displayed below the 0.00 horizontal level as exemplified on Fig. 1.1, the overall Dash market sentiment is said to be bearish, as such a buy alert will suffice.

Suggested Stop Loss for Sell Trade: Place stop loss some points above resistance.

Suggested Exit Strategy/Take Profit for Sell Trade

Exit the sell trade if the following trading conditions appear on the chart:

  • If during a bearish trend, the Dash price is seen to open and close above the middle medium sea green line of the Bollinger Bands indicator (refer to Fig. 1.1), a bullish reversal is said to be looming, as such an exit or take profit stance will do.
  • If the Momentum_Histo custom indicator pops up a green histogram that readjust to form above the 0.00 horizontal level, it is pointing to diminishing bears power, thus an exit or take profit stance is recommended.

Sell Trade Example: DASH/USD (Dash / US Dollar), H4 Chart

Fig. 1.1

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Download the Cryptocurrency Momentum Strategy That Works

About The Cryptocurrency Technical Indicators Used

The Bollinger Bands is a tool that gauges volatility in the crypto market alongside other vital information like sessions of market consolidation, direction of trend, possible tops and bottoms along with price targets.

The Bollinger Bands are actually plotted two standard deviations away from a simple moving average.

The Momentum_Histo is a custom MT4 indicator that applies the CCI or RSI on price in order to gauge the momentum of the altcoin over a specified period of time.

Easy Installation

Start using this cryptocurrency strategy in just 5 minutes. Click here to get started now.

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