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VeChain Cryptocurrency Strategy – The Power of Three
The VeChain cryptocurrency strategy is not your regular type of chart pattern strategy. The power of three techniques employs solid trading principles that will help you catch trend reversals as soon as they happen.
Our team at Trading Strategy Guides is working hard to put together the most comprehensive PDF guide to different cryptocurrency strategy. Previously, we covered Verge Cryptocurrency Strategy, which is a privacy cryptocurrency that is suitable for anonymous transactions.
The power of three method will enable you to spot when a swing low or a wing high is in the process to develop. Reversal trading can burn your account if you don’t employ the right tools. Understanding when to spot a bottom in the market and buy cryptocurrency VeChain is what this cryptocurrency trading step-by-step guide is all about.
If you can find the very start of a new trend you can actually maximize your profits. Every trend in the market starts at a certain point, so with our Free VeChain cryptocurrency strategy, we’re going to start identifying and trade from there.
Moving forward, we’re going to explain what VeChain coin is, and last but not least we’ll share the key trading rules reversal and what benefits trend reversal provides with our cryptocurrency trading step-by-step guide.
What is Cryptocurrency VeChain
Simply put, VeChain is the Ethereum for businesses. It takes the best part of Ethereum and combines it with VeChain technology to provide a platform for decentralized apps for the enterprise. VeChain blockchain can be used to authenticate wines and luxury goods.
VeChain has been called one of the most undervalued cryptocurrencies.
At the moment of writing this step-by-step cryptocurrency guide, VeChain coin is a top 19 cryptocurrency having a total market cap of more than $1.3 billion.
VeChain also has a national level partnership with the Chinese government to be the blockchain technology provider for this new development area called Guiyang. China wants to build a new smart city that uses both blockchain and VeChain coin is going to be the main partner which is awesome for the future prospect of this coin.
Now, before we’ll outline a method on how to buy cryptocurrency VeChain, we always recommend taking a piece of paper and a pen and note down the rules of the Free VeChain cryptocurrency strategy.
In this demonstration, we’re going to look at the buy side.
Free VeChain Cryptocurrency Strategy
The Free VeChain cryptocurrency strategy will teach you how to trade reversals properly. We actually believe reversal trading to be the lowest risk way of trading because you can instantly know if you’re on the right side of the market or not. Even if you’re wrong, you can jump out of the market and only lose a minimum amount of your trading capital.
There are two important elements that we need to look at in order to trade reversals successfully:
- The first thing is to know when there is a base in the market so when the market is moving down to understand how a swing low or a bottom is actually developed.
- The second thing is to understand our money management and risk position to make sure we don’t fight strong trends.
These are our trade criteria for trading reversals in the cryptocurrency market:
Step #1: Look for a downtrend that has broken a previous swing low
We’re trying to make it easier for you, so in order to determine the cryptocurrency trend, you can simply use the 50 EMA. For trend direction, the 50 EMA is one of the most prolific moving averages. In a bearish trend, the VeChain price needs to trade below the 50 EMA.
If we want to identify a change in the trend direction, we need to look at aftermarket changing factors that hint towards a change in the market sentiment. Usually, the most powerful trend reversal happens near a previous swing low.
The more significant the swing low is, the higher the chances are to have a winning trade.
From a supply and demand equation, there are lots of things that happen around a major swing low. Often times these pivot points are used for stop loss placement and once they are triggered a reversal can happen.
The key thing to keep in mind when trading reversals is that location is everything.
Now, we’re going to outline the power of three patterns that can signal a swing low.
Step #2: The Power of Three: Look for a candle that has higher lows on the right and on the left
The power of three pattern is composed of three candlesticks, where the middle candle has both on the right and on the left a higher low. When you employ the power of three at an inflection point then trend reversals become not so difficult to anticipate.
This is not a very common price action reversal pattern but it’s one of the most powerful chart patterns you’ll ever learn. What happens behind the curtain in terms of the supply and demand balance is represented by the power of three method. It simply shows more demand coming into the market.
*Note: The breakout of the first candle high doesn’t necessarily have to come with the third candle. It can come with the 4th or the 5th, etc. candle as long as the low of the middle candle doesn’t get violated. Read our candlestick trading pdf guide here.
This trend reversal pattern can be observed in the VeChain chart below:
To be able to see the reversal pattern we had to zoom into the previous VeChain chart.
Note: the third candle needs to break and close above the high of the first candle for a valid reversal pattern.
This brings us to the next important thing that we need to establish for our crypto trading strategy, which is where to buy VeChain coin.
Step #3: Buy VeChain coin when we break and close above the first candle’s high
As we noted before, a swing low is confirmed only once we have a break and a close above the first candle’s high. The power of three is completed when VeChain coin price breaks and closes above the high of the first candle, which is also the ideal place to open a buy position.
Before you enter a trade, you also need to define where to place your stop loss order. The next step will teach you a simple trading technique to help you with your protective stop loss.
Step #4: Hide your protective stop loss below the middle candle
To protect your trade, you need a stop loss in the market.
Your stop loss is just like a friend that is meant to protect you from blowing up your trading account.
With our VeChain cryptocurrency strategy is not that difficult to define the proper location to hide your stop loss. Simply place your stop loss below the middle candle low. A break below this low will invalidate the whole trade idea so there is no point in trying to force the market any longer.
Last but not least, we also need to define where we take profits when trading trend reversals.
Step #5: Take Profit at the 50% Fibonacci Retracement of the previous cycle
Once a trend reversal is set in motion according to the Dow Theory it has the tendency to find resistance at the 50% Fibonacci retracement of the previous cycle.
Simply plot the Fibonacci retracement tool from the high to the low of the previous bearish trend and set your take profit at the 50% retracement level.
*Note: the above was an example of a BUY trade using this cryptocurrency reversal strategy. Use the same rules for a SELL trade – but in reverse. In the figure below, you can see an actual SELL trade example.
Conclusion – Free VeChain Cryptocurrency Strategy
Keep in mind that each of the cryptocurrency trading step-by-step guides in this series will take time and practice to master. Using the power of three techniques can give you the opportunity to profit from a new trend no matter of the time frame it develops.
Please check out our blog if you want to learn more exclusive trading strategies that can help you model the way we trade and start to put in the planks to try to shape the way you want to trade in the future with your trading. Be sure to check out the Best Cryptocurrency to Invest in 2019 – Our Top 4 Picks.
Thank you for reading!
Please leave a comment below if you have any questions about the Free VeChain cryptocurrency strategy!