How to spot breakouts in cryptocurrency trading

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BestRate
Published in
4 min readDec 4, 2017

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The skill to spot breakouts in cryptocoin exchange can be very useful because if you can spot a good player early you can make a real fortune. Finding these signs is not that difficult and this is something that he can easily learn to do.

Of course, just like any other thing in technical analysis these signs can never give you 100% guarantee that this or that currency will win. However, these signs all really strong and they can help you indicate that this currency is going to grow exponentially in the nearest future.

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Sign #1. Resistance in the past, support in the future

Example 1. Monaco

Let’s take a look at the Bitcoin/Monaco comparison price chart.

Monaco had a very good start after launching ICO, as they managed to get 10x price spike when the coins were finally released. This is what happened in the end of August this year.

So how could such a huge price rise be predicted? Well, nobody can say for sure, but if we look into the past we can find a very good sign there.

Here, on the 19th of July 2017, there was a random breaking out candle.

Monaco/BTC price breakout on the July 19

This candle showed resistance at 60,000 satoshis. And, as we have already mentioned above, resistance in the past tends to become future support. And this is what we can see later on: in the middle of August the price has a very huge uptrend.

As you see there is nothing difficult about noticing the signs, no crazy technical analysis. The market principles of digital coin exchange are really simple. If a digital currency finds support at what was resistance in the past, then you can see a sign of maturity and of strength. It means that the currency wants to go higher.

The candle you saw on the 19th of July was very short-living and after a while it pulled back and didn’t rise for a couple of weeks. But then in broke out and it grew higher and higher.

Example 2. OmiseGo

When OmiseGo first launched their ICO it was really successful. They kept on getting resistance at 40,000 Satoshis when exchanged for Bitcoin, then this number broke up , the price ran up to 60,000 Satoshis and then cooled down once again. It stayed there for a few days, and then the price literally boosted by 10x.

And if we look into the past we will see the same sign just in the beginning.

OmiseGo-Bitcoin trading

As you see, no technical skills and needed to see these signs. Just look deeper into the history of the currency you are interested in and you will see them right there.

Sign #2. Wedge of the price action

This sign can be noticed in the example of the Vertcoin, as this coin was wedging in the price action.

There is nothing difficult about this technical pattern as well. It is related with coiling of the price action in regards to whatever digital currency you’re looking at. And in case of Vertcoin this can be seen at the graph below:

Vertcoin-Bitcoin trading: wedge of the price action

As the support level is rising, the resistance level is descending, and then the price rises to incredible heights.

Vertcoin has already seen huge run-ups in the past, this is a very good altcoin for trading. If you can notice some specific pattern and match it with this catalyst, you can usually see a breakout afterwards.

Sign #3. Constant growth on 21-day moving average

If we look into the past of the cryptocoin Stratis, we can see this sign here.

Stratis was one of the best ICO launched this year as its price boosted by 10x. So where can we see the sign of it breaking out?

The 21-day moving average can help us here. This indicator shows the avertage closing price for the past 21 days. And if it continuously grows during this period, it means that the digital coin has its momentum and it’s not going to fall in the nearest future. Vice versa, it’s going to rise soon. And this is exactly what we see in case with Stratis.

Stratis-BTC 21-day moving average

Conclusion

Look for these signs, but remember that they are never 100% guarantee that this or that coin is going to break out. Do your own research, we look for the updates on the developers’ channels. These updates can push the price up or down depending on whether or not it’s positive or not.

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