Why Conflux Rallied 237%? How To Profit From a Range-Bound Market Amid Bitcoin and Altcoins Indecisive Trade

Bitcoin is presently trading down at $47,249 after an upside move that topped out at $48,825 on Sept. 18. Bitcoin’s lackluster trading trickled into the Altcoin market as the majority of tokens recorded slight losses as of press time.

However, selected tokens such as Cosmos (ATOM, +10.37%), Audius (AUDIO, +7.46%), Conflux (CFX, +21.19%), Nervos Network (CKB, +11.79%) managed to stay in the green amid the dip.

The Conflux Network rose 237% to highs of $0.851 on September 18 following the news that Shanghai will use Conflux’s permissionless blockchain infrastructure to test an offshore yuan stablecoin in the city’s Lingang Pilot Free Trade Zone.

Crytoanalyst Michael Van de Poppe speaks on the Bitcoin price drop-

”Everyone turning bearish like a heavy bear market is happening and #Bitcoin to $20K is programmed. It’s a minimal drop” while noting the presence of a CME gap at $47,490.

”Happens quite often in the markets. Slight rally on Saturday for #Bitcoin, coming back down to CME close on Sunday. CME closed at $47,490 on Friday, seems to be that we’re going to open there too later today”.

Analysts at Standard Chartered expect the Fed to announce the taper next week after the Federal Open Market Committee (FOMC) meets. The 22 September FOMC will likely signal a tapering decision at the next meeting, providing few details. How Bitcoin decides to react to this may be quite essential.

How To Profit From a Range-Bound Market

Some analysts expect BTC to consolidate over the short term as the broader uptrend remains intact. How can traders profit from this? The price action in a range-bound market is usually volatile and random, but it can still be traded. However, if the asset trades in a very narrow range, it may be advisable to adopt a wait-and-see approach rather than trying to trade the choppy price action.

On the other hand, if the range is well-defined and large, traders can profit using this strategy- First by determining the support (necessary for stops) and resistance of the range. Second, by buying low on a rebound off the support and taking profits near the resistance of the range.

Usually, every range-bound action is followed by a strong bullish or bearish move. Two key indicators are quite useful in predicting a trend change- the moving averages and the RSI. Both can be combined to get a more meaningful outlook.

Moving averages are trend-following with the 20, 50, and 200-period moving averages being the most popularly used time frames for trading and investing. The relative strength index (RSI) is a momentum indicator, which captures changes in price and functions as an oscillator that ranges between values of 0 to 100. Generally, readings of below 30 are termed as oversold, 50 as neutral, and above 70 are presumed to be overbought.

In a range-bound market, the moving averages usually flatten out and sometimes criss-cross each other and do not slope up or down for an extended period. Such markets tend to lack direction and are difficult to forecast and trade.

To spot a bullish move after the consolidation, it may be necessary to establish the break above the range and sustenance of the RSI in the overbought territory for the initial period of the trend. Bearing in mind that when a trend begins, it generally remains valid for some time. However, there are no absolutes in this kind of scenario.

To likewise spot a bearish move, the RSI may provide a useful indication by making lower highs despite a price increase. One of the most popular uses for the RSI is spotting a divergence, which warns traders of a possible trend reversal. However, using RSI boundaries to determine trend changes outside a sideways trading market may be tainted with inaccuracies.

Image Credit: Shutterstock


Be the first to comment

Leave a Reply

Your email address will not be published.


*