STELLAR CRYPTOCURRENCY STRATEGY

20 Apr 2018

STELLAR/DOLLAR 4H
DOUBLE BAR LOW HIGHER CLOSE PATTERN (DBLHC)
What is Stellar Lumens?
Stellar is a platform that it’s trying to do very fast payments with very low fees. The key advantage of Stellar is that it has between 3 and 5 seconds confirmation time and it supports thousands of transactions per second.
Stellar Lumens price is below the $1 and trading at only a few cents, which makes XLM a top cryptocurrency under $1.
Stellar Cryptocurrency Strategy
All we need for swing trading cryptocurrency is the Double Bar Low Higher Close pattern also known as the DBLHC pattern.
All you need is to look for two bars that have equal lows or near the same price level. The second condition that needs to be satisfied for a valid DBLHC is that the second candle needs to close a lot higher than the first candle (see chart above).
Usually, the bar tails are tiny, but the candlestick body is large.
Step #1: Find a bullish trend or wait until the market develops a swing low
The double bar low higher close can be found at the end of a bearish trend and the start of a new bullish trend acting as a reversal bullish pattern. However, at the same time, the DBLHC is also a continuation pattern that can develop at any stage during a bullish trend.
Having a prior trend already established increases the probabilities of the DBLHC pattern to work.
The DBLHC can produce the same kind of results even when the market is only in the process of establishing a market swing low. If a DBLHC develops right after a swing low is created that’s the confirmation we need that the institutional money is buying low.
Step #2: Wait until the DBLHC chart pattern develops on the Stellar XLM Chart
Now that you’re familiarized with the DBLHC pattern, it should come easily to spot this powerful chart pattern on the Stellar chart.
The DBLHC pattern has two identical lows and the second candle close is way higher than the high of the first candle.
In most of the cases the first candle will be bearish followed by a second bullish candle, but as we can see the Stellar price action is developing a DBLHC were the first candle is also bullish. This doesn’t invalidate the DBLHC chart pattern as in our books; it’s still a very tradeable chart pattern.
Step #3: Buy at the market at the opening of the next candle after the DBLHC pattern
When to buy Stellar is quite easy. As per the DBLHC pattern rules, we need to enter immediately at the market when the DBLHC has formed. Alternatively, we can place a buy limit order above the high of the second candle.
Buying Stellar with our cryptocurrency buy strategy will offer you a high risk to reward ratio.
The second advantage you have is that you’re buying Stellar right when the bullish momentum is starting to build up. Technically, this means that the price should never look back, which means that the drawdown should be minimal.
Step #4: Place protective Stop Loss below the DBLHC low
The DBLHC chart pattern also provides us with a great spot to hide your protective stop loss.
Trading without a stop loss is the number one mistake that traders make. Make sure you always trade with a stop loss to protect your account balance.
After you bought XLM coin, the protective stop loss can be placed below the DBLHC low.
Step #5: Take Profit when we break below the up-sloping trend line that connects the swing low points
The first thing we need to do when trading Stellar and you want to cash out some of your profits is to draw an up-sloping trend line starting from the swing low you identified in Step #1 and connect all the swing low points that are part of this new uptrend.
As soon as Stellar XLM price breaks and closes below the upward trend line you take profits.
This take profit strategy will maximize your trading profits and it will keep you as long as the bullish momentum is strong.
Note** the above was an example of a BUY trade using the Stellar cryptocurrency trading strategy. Use the same rules for a SELL trade – but in reverse.