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At some point, the XRP rally will end.
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Establishing buying and selling strategies can maximize profits.
XRP, the Cryptocurrency issued by the company Ripple Labs, is in fashion.
The price of this digital asset has skyrocketed, reaching levels not seen in 3 years.
In this context, many may wonder When would be a good time to take profits or, if there was a bearish correction, when would be a good time to buy XRP.
While there cannot be an infallible answer, there are certain indicators that can help make this decision. It must be clarified that these indicators are only an aid and should be used together with other technical or fundamental analysis tools, to be able to make more accurate decisions.
Likewise, nothing guarantees success in the Bitcoin-criptomonedas-exchanges-ordenes-estrategias-trader-derivados/” target=”_blank” rel=”noreferrer noopener”>trading or in investments, so you should always operate with money that you are willing to lose.
Next, we will look at 3 indicators that are available in Binance” target=”_blank” rel=”noreferrer noopener”>Binancethe largest bitcoin (BTC) and cryptocurrency exchange in the world.
Please note that, for the purposes of this tutorial, we will use the XRP-USDT pair with daily candlesticks, but these indicators could – perhaps with certain modifications or particular strategies – be adapted by the investor for use in other pairs cryptocurrencies or temporalities.
It is worth clarifying that, in order to see these indicators in Binance The graph display must be activated in “TradingView mode”by pressing the button above the price graph:
It is necessary to activate chart visibility in TradingView. Fountain: Binance – Screenshot by CriptoNoticias.
Likewise, to activate, deactivate or change the indicators, it will be necessary to click on the corresponding button, which is also above the price chart:
Where to activate, deactivate or change technical indicators? – Fountain: Binance – Screenshot by CriptoNoticias.
This is probably the best-known technique for buying and selling financial assets in the world.
It simply consists of activate the display of two moving averages of different temporality (for example, 10 and 20 periods).
When the short duration moving average crosses above the long duration moving average it is interpreted as a buy signal.
The same thing happens the other way around: when the long-duration moving average crosses below the short-duration moving average, it is interpreted as a sell signal.
Below is how this technique could be applied. We will use exponential moving averages, for greater precision.
First of all, the “EMA Crossover” indicator is searched for and activated:
Activation of the exponential moving average crossover indicator. Fountain: Binance – Screenshot by CriptoNoticias.
Then, in the gear symbol, the timing and colors of the moving averages can be changed to the user’s liking.
This is what the chart looks like with a 10-day exponential moving average (green) and a 20-day exponential moving average (red).
Bitcoin price with daily candles and 10-day (green) and 20-day (red) moving averages. Fountain: Binance – Screenshot by CriptoNoticias.
According to this indicator, XRP is in an uptrend. The moment the green line crosses below the red line, that uptrend could be considered over.
If a back-test is carried out, it will be evident that, just as this strategy has given good signals, it also gives many false signals. It usually occurs, above all, in moments of lateralization, when there is no well-defined upward or downward trend.
If you are looking for an even simpler strategy, The use of a single moving average can also be useful.
This is usually more effective for those investors who are long-term, but do not want to “suffer” the downward trends that the financial asset may have.
We will activate a single exponential moving average on the chart (it could also be done with a simple moving average). For this, we write “EMA” in the indicators and scripts search engine.
Search for ‘exponential moving average’. Fountain: Binance – Screenshot by CriptoNoticias.
Then, the indicator will have to be configured. After clicking on the gear that leads to the settings, in “Data entry” you must indicate which time period the moving average will evaluate. This is done by modifying the value shown in “Length” which, by default, is 9 days.
The most used time frames for medium and long-term investment are 50, 100, 200, 500 and 1,000 days.
Do the test with each of them (even with other temporalities) so you can see what the graph looks like and what correct and false entries it has given in the past.
The strategy is simple: when the price of the asset closes a candle above the moving averageis considered to enter an uptrend and, therefore, It is a buy signal. Instead, when the asset price closes below the moving averageis considered to enter a downtrend and, therefore, It’s a sell signal.
The following chart shows the price of XRP at the time of this publication, with a 50-period exponential moving average on a daily basis. According to this strategy, when XRP crosses below the blue line (which is the moving average) it would be time to sell, as the bullish trend could have ended.
XRP price and 50 period exponential moving average. Fountain: Binance – Screenshot by CriptoNoticias.
3 – SuperTrend
The last indicator present in Binance that will be analyzed in this tutorial (which does not mean that there are not many others) is the SuperTrend.
It is explained on the website of TradingView (platform that can also be used for price chart analysis):
«The Supertrend is a trend indicator based on the Average True Range (ATR). Its single line calculation combines trend and volatility detection. It can be used to anticipate changes in trend direction and to place stop losses.
TradingView, technical analysis tools platform.
To activate this indicator it is necessary to go to the indicator search window and write its name there:
Search window with SuperTrend indicator. Fountain: Binance – Screenshot by CriptoNoticias.
The SuperTrend can be used as it comes by default, without the need for further configuration. The strategy is simple. When it turns green, it is a buy signal indicator. When it turns red, it is a sell signal indicator..
SuperTrend indicator with XRP price on Binance. Fountain: Binance – Screenshot by CriptoNoticias.
It is recommended that the user do a test to observe in which cases the strategy is successful, in which cases it gives false signals and in which candlestick timing it best suits their way of operating.
Technical indicators: useful tools, but not infallible
The technical indicators described in this tutorial are useful tools for the analysis of XRP and other financial assets.
However, it is important to remember that These indicators are not infallible and can generate false signalsespecially in lateralized markets or in the absence of clear trends.
For this reason, it is usually recommended to use them within a predefined strategy that also considers other factors of technical analysis either fundamental.
It is important to keep in mind that success in trading or investing is not guaranteed, even using the best tools available. Therefore, this article does not constitute a financial recommendation or investment advice. Each investor is responsible for conducting his or her own research and only trading with capital he or she is willing to lose.
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