Zcoin (XZC) Cryptocurrency Strategy – 3L-R Trade Pattern
There are many reversal trading strategies, and the Zcoin (XZC) cryptocurrency strategy is one of our favorite strategies because uses one particular reversal pattern that provides accurate entries. The 3L-R pattern can be used to trade market reversals with a good risk to reward potential.
Our team at Trading Strategy Guides is working hard to put together the most comprehensive PDF guide to different cryptocurrency strategies. Zcoin can become the next Monero because it’s focused on providing anonymous transactions and privacy.
Bitcoin is still remains the world’s leading cryptocurrency, but Zcoin like other alt coins tries to bring more anonymity to the digital coins ecosystem.
Our free Zerocoin trading strategy will help you buy XZC without using any technical indicator or any other tool except the price action. The main advantage of a pure price action strategy is the fact that you’ll have an uninterrupted view of the Zcoin price.
We’re going to reveal what are the ingredients of a perfect reversal trade, which the 3L-R trade pattern incorporates
Moving forward, we’re going to explain what is Zcoin, and what are the key Zcoin features, and last but not least this Zcoin XZC cryptocurrency strategy will outline a method on how to buy Zcoin.
What is Zcoin?
Zcoin also known as XZC or Zerocoin is an open source decentralized blockchain that focuses on achieving anonymity and privacy for its users.
Zcoin was developed by Johns Hopkins University cryptographer Matthew D. Green and it’s based on the Zerocoin protocol, which was originally created in 2013.
Zcoin is the only coin out of the top 100 most valuable digital coins that has big potential, with a total market cap of about $77 million, and it’s currently trading at around $15 per coin. Even though it ranks far behind Monero or Dash, Zcoin has the advantage of having only a small coin supply.
Basically, Zcoin seeks to refine things that Bitcoin lacks, like: fungibility, privacy and miners centralization.
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of the Free Zerocoin trading strategy.
For this demonstration, we’re going to look at the buy side.
How to Buy Zcoin?
Reversal trading comes with its own challenges. From a psychological point of view it’s hard to trade against the prevailing trend. Ultimately, reversal trading requires strong trading discipline.
All new trends start out as a reversal and the less unknown 3L-R reversal pattern will help you not just to catch a trend reversal, but also to gain a better understanding of how the market really works.
The 3L-R reversal is a four-bar pattern and it means three lows (3L) followed by a reversal (R).
The main characteristics of this reversal chart pattern are the three consecutive lower low candles. The high price of these three particular candles doesn’t matter; the only thing that matter is that each low is lower than the prior low.
The fourth bar of the reversal chart pattern needs to have the high bigger than the highest high of the previous 3 candles. We’re not concerned about the low of the last bar.
Like with all our trading strategies we’re going to give you first the trading rules by going through an actual live trade example.
Step #1: Identify Three Consecutive Lower Low Candles
The first component of this reversal pattern is the three consecutive lower low candles. At this point we’re not concerned about the highs of the three candles.
However, you’ll notice that most of the time each consecutive high is also lower than the previous high.
What is great about the Zcoin (XZC) cryptocurrency strategy is the fact that it’s designed to catch market reversals right at the moment they occur.
Now, let’s move forward, and outline the next essential feature of the Free Zerocoin trading strategy.
Step #2: The fourth candle breaks above the first bar high in the reversal pattern
The immediate candle after the three lower lows needs to be a bullish candle and secondly it needs to break above the first bar high in the pattern.
Normally, the highest high of the first three bars is made by the first bar, however, in the event that this is not the highest high we need to wait until the fourth candle breaks above the highest high of the previous 3 candles.
Note* It’s important that the 4th candle breaks above the first candle high, not the 5th or the 6th because that will invalidate the reversal pattern. We need to be very precise when trading reversal patterns like the 3L-R pattern.
Even though we said that we’re not concerned with the low of the fourth bar, it does matter if the low is higher than the third bar’s low. Through our backtesating results we have found out that this yields better trading performance.
This brings us to the last trading condition which is also our trigger for the entry strategy and how to buy Zcoin.
Step #3: How to buy Zcoin: Buy if the fourth candle closes above the last three candles highest high
Before we pull the trigger and buy cryptocurrency Zcoin we need for the fourth candle to also close above the first candle high or above the last three candle highest high point, whichever that might be.
Now is the time to convert this reversal setup into profit and buy Zcoin when the fourth candle closes above the last three candles highest high.
This brings us to the next important thing that we need to establish, which is where to place our protective stop loss.
Step #4: Place your protective Stop Loss below the 3L-R pattern low
Trading reversals have lots of benefits and among other things it offers us the possibility to really use a very tight stop loss. If the trade doesn’t work the market will tell you very quickly and it will produce only very little damage to your account balances.
Like with any reversal pattern, if you want to keep the stop very tight you need to place your protective SL below the reversal pattern aka below the 3L-R pattern low.
Last but not least, we also need to define where we take profits when trading cryptocurrency Zcoin.
Step #5: Take profit should be at least two times bigger than your Stop Loss
If you trade this reversal pattern on intraday charts, it’s best to simply take profit once the Zcoin price will give you a return that is two times more than your stop loss. In other words, you have a risk to reward ratio of 1:2.
Alternatively, if you use higher time frames the exit strategy should be based on a trailing stop.
Note** the above was an example of a BUY trade using the best Zcoin XZC cryptocurrency 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 Zerocoin Trading Strategy
Our free Zerocoin trading strategy doesn’t presume when a trend reversal will occur, but we need to follow some specific requirements to align and signal a reversal is underway. The 3L-R chart pattern is not going to be behind all trend reversals, but when it shows up it often signal a strong trend reversal. We also have training on how to trade with the Gartley Pattern.
Currently there are a lot of fears revolving around taxes with cryptocurrencies which makes the alternative privacy coins such a good investment because they can’t be tracked. Unlike other privacy coins, Zcoin is also based on the Bitcoin code which makes it so much more attractive. If you were a fan of this strategy, be sure to check out out the best bitcoin trading strategy article.
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