Does bitcoin follow the same market rules , I dont get it?

Hi everybody everywhere, after finishing babypips school I was so excited to start applying what I have learned in it , I am in cryptocurrency trading , but each time I try to apply what I have learned I find that the crypto world is not making any sense regarding the indices for example:

here ethereum price retested the same level , but with higher volume , this should be an indication to buy right ? volume increasing = more interest in the asset

no wrong the price dropped down extensively just after it

in the second example, there is divergence between bitcoin price and the stochastic , price shows higher highs while the stochastic showing lower highs , now it is time to sell …

wrong again , the price jump about 800 dollars

I know that the indices are just " analysis " it can be right it can be wrong but with crypto I feel it is always haphazard , what exactly am I missing? any help?

“Cryptos” are NOT “normal” - They are either a cpmpletely new and world changing phenomenon, OR just a demonstration of an “Extraordinary Popular delusion and the madness of crowds” - which happen from time to time.

My own feeling is that they are tthe latter, but in either case “Retail tools of normal trading” will not apply.

Basically you have to “have faith” in the “New order”, or apply your tools to a different market, to see whether you can make the tools work.


I’m guessing that you mean indicators when you refer to indices.

I dabble in bitcoin on a buy-and-hold basis. I’ve done it two ways: (1) with regular dollar-cost-averaging purchases made on a set schedule, and (2) by trying to time the market.

Method (1) is sort of a blind, no-brainer approach, requiring no technical analysis, at all.

Method (2) could incorporate any number of technical tools. But with bitcoin,I have used only the simplest forms of price-action analysis, plus an occasional look at fibonacci retracements. It has never occurred to me to try to apply any other indicators to a bitcoin chart, probably because I sense (intuitively) that bitcoin just doesn’t fit the usual mold.

But, there are analysts who do use other technical tools, including such indicators as stochastics. One such analyst, who represents MEX Exchange, posts here in the forum regularly.

Here is his latest bitcoin analysis –

You might want to follow his bitcoin analysis for a few weeks, to see whether you can glean any useful techniques from his approach.

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I totally agree, but the issue is alot of people out there on youtube , twitter …etc , are trying to convince others that the market can be read by regular methods like bollinger bands, fib, resistance and support lines, they even have seminars and courses for technical analysis for crypto , as a newbie I always doubt myself , so that is why I am asking here in the forums maybe somebody has an explanation

great link thanks
I do not understand exactly your system, would you please give more details

What I’m doing isn’t sophisticated enough to be called a system.

(1) “Regular dollar-cost-averaging purchases made on a set schedule” — simply means every month, based solely on the calendar, purchasing x-dollars worth of bitcoin, regardless of the current bitcoin price, and regardless of the apparent direction that price is trending.

When the price is higher, x-dollars will buy fewer bitcoin. When the price is lower, x-dollars will buy more bitcoin. Over time, and in a rising market, dollar-cost-averaging results in a lower total expenditure (for a given quantity of bitcoin) than would be achieved by purchasing a fixed amount of bitcoin each time on the same schedule.

The assumption of a rising market is essential to this approach.

(2) “Trying to time the market” — simply means attempting to “buy low” rather than “high”. In other words, attempting to identify swing lows, and using those lows as buying opportunities, whenever they present themselves.

As I said in my previous post, I use very simple price-action analysis to identify (guess might be a more accurate term) those buying opportunities. Primarily, I rely on ordinary support and resistance, common chart formations (double bottoms, bear flags, etc.), and common candlestick patterns (engulfing candles, dojis, etc.) to try to identify highs and lows in the bitcoin price. Since I’m interested in buying-and-holding, rather than trading into and out of bitcoin, I focus on the swing lows I’m able to identify, and I ignore the swing highs. And, as I said before, occasionally I look to fibonacci for some additional guidance.


thanks very much , very helpful comment and information I use the same technique ( the first one for half of my portfolio) , the other half I am trying to trade with.

It’s definitely an agenda. But people can still make money if they’re lucky, but lose everything in a split second. It’s too risky

I agree, but luck should be our last resort in this case as often comes to an end unexpectedly. For me the crypto market is still highly unpredictable so as Clint says, here the strategy should be as plain and simple as possible. It just does not fit the ordinary market rules with which we are used to.

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There are a few of us who believe it DOES follow the “Market rules” - Just because some do not recognise or like the rule it is tending towards, does not mean it is exceptional.

There are some words which should ring alarm bells whenever you hear them or minor variants.

One of those phrases is "This time it’s different " ! :slight_smile:

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@badawy0118 From your examples so far it seems to me that you’ve established a trend.
Whatever the technical analysis “tells” you - do the opposite and you’ll profit.
:smiley: :smiley: :smiley:

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Ok, that’s a new one :joy::joy:

It’s more chaotic imo.

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Bitcoin has its own ethics as it consists of the different pay out, liquidity, volatality, advantages, and disadvantages from the Forex market. The main difference is that Forex is a well mature market but Bitcoin is still under-developed cryptocurrency. So, think about it which is better for you.

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Tech analysis still help with Bitcoin and some high volume+ liquidity Alts. Rest of crypto not as much.
Elliott waves are tricky with crypto .
Therefore tech analysis only help with scalping and swing.
2ndly just tech analysis is no good as you need to follow news closely. Crypto is mixture of sentiments of retail buyers + institution money and day traders.
Therefore there will also be distortion on the charts.

In your particular charts try to use 1-2 hr chart for swing compared to 4hr to daily on forex.
For day trade use 30min .
Crypto is volatile and market sentiments changes every few hours so you will need to consider shorter time frames.
No one knows whats going to happen in crypto that is the market is about.
Tech analysis are more accurate actually when the market is side ways.
Also please look into 55 EMA strategy this will help you to see the trend better.
My basic indicators for swing are:
For scalping I would add
Stoch RSI (scalping)

Please don’t give up tech anslysis. I made a lot of loss in crypto and only recovering in dead market with tech analysis.
Hope it helps.

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Hi and thanks for your detailed reply , would appreciate it if you explain it a little bit more

and also let me explain my system also
first I take a look on the 4 hrs chart to see if the price is trending or ranging

if trending , I open 2 charts ( 6 hrs and 1 hr ) [ this system is a modification of the triple screen system propsed by Dr. Alexander Elder ]
in the first one ( 6hrs chart) , i open MACD and EMA ( short and long periods) , the most powerful signal would be EMA cross over + MACD rising from negative ( buy signal), any one of them alone is a less powerful signal

in the second screen , I look for a retracement , I used STOCH along with candles , when stoch is below 50 and reversing and one candle get higher than the previous candle i buy with stop loss just below the lowest previous low , and pt 2 ATR

this system is ok on back testing , but the problem is when I tried it in forward testing in dosent work , either getting me out too soon , or missing the whole movement because MACD need time to change.

I just started trading crypto in February after a very successful month-long test on BTC that netted my demo account 40% in one month! So I figured it was time to put my money where my mouth was. I was also using MACD as my main indicator and would couple with it two other confluence indicators and/or candlestick formations to indicate a buy or sell. It works fine when you have prolonged uptrends to take advantage of. But if you look at February and especially March, Bitcoin hasn’t had much in terms of up trend. So going long has been painful.

One thing I noticed about the lagging nature of MACD was that right as the MACD crossed, I would buy, only to see myself literally buying at the top of whatever mini uptrend there was, only to see it go down again. Always getting stopped out. So MACD is actually probably a poor method to use in a downtrending market.

Just a few days ago, I noticed one potential reason for this by looking at the Stochastic RSI indicator. Whenever the MACD crossover would finally trigger “hey a new uptrend is in store” the Stochastic RSI would typically be in the “over bought” region. So I was entering when I should be selling! I did a new backtest (BTC, 4-hr) by layering in buys whenever Stoch RSI was below 20 and then crossed upwards. If it went lower, I would buy more, in increasing quantities (say up to 3 orders of 15%, 30%, 50% of my account). I would then start layering out once it got back up to the 80. Or if the Stoch RSI gave me a downward cross, that would be my cue to exit. My backtest contained Feb - late March data and the account grew 35% in that time frame even though the overall trend was severely downward. BTC lost 9% in the same time.

Here’s an image showing the results of this test:

Hope it helps with some ideas. I am now testing out this Stoch RSI strategy real time so we’ll see how it goes.

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looks like a wise system although I prefer the ones that study different time charts please keep us updated

Looks like you’re on to something.
Just out of curiosity, @badawy0118 did you use the same MACD as an indicator ?