bitcoin

3 Technical Indicators to Help Time Bitcoin’s Price Action

With the upcoming launch of the Digitex Futures Exchange, our team has been focused on creating educational material to allow traders and market participants alike to benefit the most from zero-commission trading.

In our beginners’ guide, for instance, we explain the basics of how to trade crypto derivative products and give you a breakdown of the platform.

Now, we want to help you understand how different technical indexes within Digitex Futures can help you time your next trade.

3 Technical Indicators to Supercharge Your Bitcoin Trading

One of the most widely used technical indicators among traders is the Bollinger bands. This analysis tool is defined by a set of two standard deviation lines and a simple moving average. Its popularity relies on the ability to identify that momentum is building up for a period of high volatility.

When the price action of a given asset goes through a stagnation phase, the Bollinger bands tend to squeeze. Squeezes are indicative of periods of low volatility and are typically succeeded by wild price movements. The longer the squeeze, the higher the probability of a strong breakout.

A look at BTC’s 5-min chart reveals that the Bollinger bands are squeezing. Since this technical index does not provide a clear path of where BTC could be headed next, the area between the lower and upper band is a reasonable no-trade zone.

A decisive move above or below this area will determine the direction of the trend.

Bitcoin USD price chart
Bollinger Bands Squeeze Signaling High Volatility. (Source: TradingView)

Nonetheless, when taking into consideration the parabolic stop and reverse, or “SAR,” we can estimate that the direction of Bitcoin is currently bullish despite the low levels of volatility.

Every time the stop and reversal points move below the price of an asset, it is considered to be a positive sign. On the flip side, when the SAR points move above the price of a given asset, it can be viewed as a bearish signal.

By taking in aggregate the Bollinger bands and the stop and reversal system, we can assume that there is a higher probability that Bitcoin will go up when volatility strikes back.

But how high can it go?

Bitcoin USD price chart
Stop and Reversal Points Turn Bullish. (Source: TradingView)

To answer this question, we can use the Fibonacci retracement indicator. This metric is based on a sequence of numbers expressed by ratios between the numbers in the series, according to Investopedia.

By plotting two extreme points, which are the most recent swing low at $9,475 and the peak of $9,820, the Fibonacci retracement indicator provides critical ratios that can be considered areas of support and resistance.

A bullish impulse that allows Bitcoin to move above the overhead resistance could see it rise towards the 127.2%, 141.4%, and, most importantly, the 161.8% Fibonacci retracement level. These resistance barriers sit approximately at $9,900, $9,960, and $10,030, respectively.

Bitcoin USD price chart
The Fibonacci Retracement Indicator Suggests the Next Major Resistance Sits at $10,030. (Source: TradingView)

At press time, we can see that the stop and reversal points accurately predicted that Bitcoin’s trend was bullish despite the consolidation phase. As the bellwether cryptocurrency broke above the resistance represented by the upper Bolliger band, it seems to be marching towards the 127.2%, 141.4%, or 161.8% Fibonacci retracement levels.

Bitcoin USD price chart
The 3 Indexes In Question Seem to Work Effectively. (Source: TradingView)

Individually, these different technical indicators may seem to provide an ambiguous outlook about future Bitcoin prices. Taken in aggregate, however, they can provide actionable information about when to enter and exit trades on the Digitex Futures Exchange.

With a good dose of patience and high levels of concentration on the charts, it is possible to minimize risk while profiting from Bitcoin’s price action.

crypto

High Interest in Crypto Derivatives is Bullish for DGTX

The crypto derivatives market has grown in popularity over the years. As institutional investors flock to the industry, there has been an increasing demand for crypto futures, options, and swaps offerings. Indeed, new volume records are being set constantly due to the interest for such financial products.

Data from Skew reveals that despite the high levels of volatility seen recently as speculation mounted regarding Bitcoin’s halving, the aggregate BTC futures volume today accounts for more than $35 billion. 

Huobi is currently leading the charts with a trading volume of $8.2 billion in the past 24 hours. The Singapore-based cryptocurrency exchange is followed by OKEx and Binance, which reported volumes of $7.2 billion and $6.7 billion, respectively. 

Once known as the king of the crypto derivatives market, BitMEX has fallen down to the number four spot with BTC futures volumes of $5 billion. This cryptocurrency platform may have put a permanent stain on its reputation after the massive collapse of its liquidation engine during Black Thursday in March. 

High Interest in Crypto Derivatives is Bullish for DGTX 1

BTC Futures Volumes. (Source: Skew)

Regardless, the popularity of all of these industry leaders may enter a downward trajectory as Digitex Futures is set to disrupt the entire crypto derivatives sector. 

A New Player on the Block

The new trading platform led by Adam Todd will introduce a zero-fee trading structure into the crypto derivatives market. The commission-free exchange will enable traders and market participants alike to speculate on the future price of a given asset without taking a percentage of their profits. 

When taking into consideration the current industry leaders — Huobi, OKEx, Binance, and BitMEX — they all charge considerable trading fees. Although their fee structure may seem meaningless, it makes trading strategies like scalping impossible since profits are slowly eaten up by commission fees. 

The world’s largest cryptocurrency exchange by trading volume, Binance, for instance, charges a maker fee of 0.02% and a taker fee of 0.04% on its crypto derivatives trading platform, Binance Futures. While this may not look like much at a first glance, when trades are being made using 100x leverage, that quickly becomes 2% to enter and 4% to exit a position. 

These fees are even more significant in Huobi, OKEx, and BitMEX, which are charging 0.2%, 0.1%, and 0.075%, respectively. When added up, these commissions have the ability to wipe out a trader’s small profits.

Unlike any of these cryptocurrency exchanges, Digitex Futures will allow anyone to place as many long or short positions as they wish over and over again without incurring a single fee. This is a clear advantage for traders who want to capitalize even on the smallest market fluctuations. And, it will certainly open the gates to a new wave of demand for the DGTX token, which makes all of the above possible. 

Demand for DGTX Is Expected to Rise

Having the possibility to profit in every single movement of the market will even get the average Joe interested in trading. As users of Digitex Futures will rely on DGTX to have access to the platform, the demand for this utility token will likely shoot up. 

Such a bullish outlook coincides with what can be seen from a technical perspective.

The Tom Demark (TD) Sequential indicator is currently presenting a buy signal on DGTX’s 1-day chart. The bullish formation developed in the form of a red nine candlestick. Due to the recent price action, however, it transitioned into a green one candle. 

The aforementioned technical index estimates that a further increase in the buying pressure behind DGTX will validate the optimistic outlook. If so, this altcoin could be poised to surge for one to four daily candlesticks or begin a new upward countdown. 

High Interest in Crypto Derivatives is Bullish for DGTX 2

TD Setup Presents a Buy Signal For DGTX. (Source: TradingView)

Adding credence to the bullish outlook, the corrective phase that DGTX went through since early April allowed it to hit the 50% Fibonacci retracement level. Although DGTX barely touched the 38.2% Fibonacci retracement level as forecasted last week, around the 50% Fibonacci retracement level is where most of the price action took place.

Based on Gann’s 50% retracement theory, this Fibonacci level presents a crucial opportunity to “buy the dip.” If DGTX is able to bounce off this area with enough volume behind it, it could rapidly rise and reach higher highs. 

Otherwise, it may present another opportunity for sidelined investors to get back into the market. 

High Interest in Crypto Derivatives is Bullish for DGTX 3

DGTX Bounces Off the 50% Fib Level. (Source: TradingView)

With Bitcoin’s halving now written into the history books and Digitex Futures preparing to launch fully to the public this summer, it is just a matter of time before DGTX achieves its upside potential leaving competitors in the dust.