Hello, everyone, welcome again to our 18th installment of the Coinrule Strategy of the Week series. Again, we’re thrilled to be streaming simultaneously across an array of platforms. And so, you could be tuning in via Twitter or LinkedIn, or numerous other venues. And don’t forget, the recorded version of this live stream will be uploaded to our YouTube channel afterward.
If you’re catching up with us for the YouTube recording, and consider becoming a part of our vibrant discord community to stay up to date about our next live streams, you can find an invite link to this in the video description. This will afford you the chance to pause any strategy-related queries in real-time enabling us to provide instant responses which is obviously a win-win for both parties. Of course, we understand that live attendance may not always be feasible, due to professional obligations, time zone differences, and more. In such cases, feel free to revisit the recording on YouTube at your convenience. Lastly, remember that our YouTube channel hosts diverse Strategy of the Week videos. So, if this strategy isn’t quite your cup of tea, there’s plenty more to explore.
Okay, so let’s dive in. So, similar to last week, we’re spotlighting a strategy that harnesses the power of the Relative Strength Index, RSI, and Basic Moving Averages to pinpoint entry positions for long positions. For the position, exits will again be leveraging these two technical indicators. And what makes this strategy particularly appealing is that I will not use TradingView signals sorry, this means that we’ll be able to take advantage of Coinrule’s “any coin” scanner, this is really one of our most powerful features. And essentially tthis tool will scour the market hunting for coins that match our entry criteria and subsequently initiating trades on those coins. Additionally, this strategy comes prepackaged as a template on Coinrule, making it a breeze to set up and launch. This is actually one of our most long-standing and most popular templates called Catch the Bottom.
For those interested in a deep dive, the accompanying script for the strategy is available on TradingView. If you wish to conduct a backtest, that’s totally possible, and I’m going to guide you on how to do that process later on. So first, let’s have a quick look at the broader macro picture. So, let’s head to TradingVew quickly.
So firstly, we recently got a resolution to the debt ceiling crisis, which essentially means that the United States government is no longer at risk of defaulting on its debt. And the debt ceiling is essentially a limit on the amount of money that the government can borrow. And when this is reached, the government can no longer borrow money to pay its bills. This can obviously lead to a government shutdown, which is when the government is unable to pay its employees or provide essential services, which would obviously be very, very bad for the economy.
With that ceiling, a resolution was recently passed on June 3rd, and it essentially raised the debt ceiling by $1.2 trillion.
This will allow the government to borrow money until around December 16th, 2025 if we forecast current spending to continue. So, although the market is currently out of the woods with respect to this for now, we will probably be having a similar debate again come December 2025. I believe that’s a few years away for now.
Currently, as you can see here, Bitcoin is valued at around $27,000 and Ethereum is trading close to 1850.
The worldwide cryptocurrency market cap is approximately 1.1 5 trillion right now, having fallen about 3.4% in the last couple of days. Around 5045 billion dollars are locked in DeFi and Bitcoin domination is currently around 50% of the market.
And the performance of equities has been relatively flat in recent days. But the cryptocurrency markets have seen a sharp plunge recently. You can see this just here we had a quick flash dump. This was spurred by a string of fresh filings by the SEC. Among the actions was a lawsuit against Binance. Its associated companies and its founder Changpeng Zhao. These were for alleged infractions including the provision of unregistered securities, such as B & D, B USD, and staking services, failure to register as a clearing house broker and exchange, inappropriate mixing of customer funds, wash trading, and more. So, it was really a waterfall of charges that they’ve imposed on Binance.
These charges rattled the crypto market briefly, I should say, causing Bitcoin to drop roughly 5% yesterday, leading to the liquidation of almost 300 million in long crypto positions, which marked the daily record for 2023.
The SEC has regulatory pressure in the US escalated as it filed a lawsuit against Coinbase. Less than a day after the action against Binance. The SEC claimed that Coinbase also neglected to register as a clearing agency and broker and an exchange and further accused the Coinbase staking program breach securities laws. As a result, Coinbase shares fell about 16% on the morning of the third or fourth sorry. Despite this, the crypto market seems to be somewhat resilient following the lawsuit against Coinbase. You can see here it didn’t actually perform too badly, possibly due to the fact that leverage was largely eliminated with the news of Binance.
As you said, the SEC is really going after the exchanges this week.
Okay, so let’s have a quick look at the technical. Here, you can see I’ve highlighted some key levels. And during your last Strategy of the Week video, we highlighted the MACD line, which is this blue line here looked like it was about to cross above the signal line, which is the orange line. As you can see, this recently happened just again here and it’s crossed back under it. So, it’s really teetering whether it’s going to go above or below. So, it’s still quite indecisive. If it crosses above, this will be a bullish signal. This is when the histogram turns green. You can see one of the times that this happened we got a big increase in bullish momentum. And then when it turns red, which essentially when the MACD crosses under a signal line here and the histogram turns red, we got a big increase in bearish momentum. So, it’s quite an important indicator to keep an eye on so you see here it’s quite indecisive whether it’s going to go be positive or negative effectively. So, this is what is most certainly keeping an eye on.
Let’s also have a quick look at the RSI, and pull this up.
In the RSI you can see it’s been relatively closer towards oversold territory in recent weeks. But right now, it’s relatively neutral it is hovering around 50. So that’s not telling us a huge amount right now.
Right, so let’s have to discuss the indicators we’re using today for the strategy. And mostly you’ll be rather familiar with them again because it’s just simple moving averages in the RSI boring run through them quickly regardless. So, we’re not using the MACD. So, I’ll get rid of this. And I’ll just pull up the RSI so we’re going to discuss this one first. So, this is the Relative Strength Index is a popular tool used in the technical analysis of all financial markets. It’s a momentum oscillator that measures the speed and change of price movements. That essentially oscillates between zero and 100. I’ll see if I can shrink this quickly. So, you can see that it’s usually between zero and 100 up here.
Traditionally, the RSI is considered overbought when above 70 and oversold when below 30. In other words, the RSI values above 70, it might suggest that the asset is being overbought and could be due for a price correction or reversal. Conversely, an RSI value below 30 suggests that the asset may be oversold and could be due for a price bound or reversal.
The RSI is calculated based on average price gains and losses over a defined period of time. Typically, 14 periods in its standard form, essentially is used to help identify whether an asset’s price momentum is strong or weak. It’s worth noting that just like all technical analysis tools, the RSI isn’t perfect and doesn’t guarantee success. And so, it’s typically used in conjunction with other tools and analysis methods to make informed decisions.
So, some of these moving averages as you can see here, I’ve got two moving averages loaded up here, this red one MA9. And this orange one MA50. We’ll be using these for exit conditions for the strategy. So, they’re pretty relevant ones to discuss for the strategy.
So simple moving averages are widely used tools again, in technical analysis there again, one was popularly used to help smooth out price data while creating a constantly updated average price. The average is ticking over a specified period of time like in this case, 9 days on 50 days here.
But this could be 10 days, 20 minutes, 30 weeks or any time period trader chooses really, they’re very customizable.
Here’s how it works. So, say you want to calculate the 9-day SMA for a particular coin. For each day you would add up the closing prices for the last 9 days and then divide that total by 9. This gives you the average closing price over the last nine days. The next day, you drop the oldest price and add the closing price for the new day and divide by nine. The process is repeated over and over which creates the moving average line on the chart. It’s very easy using these technical indicators here because this is obviously automatically done for you.
The main function of an SMA or a simple moving average is to provide traders with a sense of the overall trend direction of the market. If the SMA is moving up, the trend is up and if the SMA is moving down, the trend is down. It’s worth noting that SMAs can be biased due to their nature since the average past data, they may be behind the market, Exponential Moving Averages, which are similar to moving averages as simple moving averages, but they place more emphasis on more recent data points. So just like the RSI, Simple Moving Averages are typically used in conjunction with other forms of analysis to make informed trading decisions, and they’re not guaranteed to predict market movements accurately on their own. Hence this is why we’re using a combination of the two technical indicators to enter and exit trades with the strategy.
Nice, so let’s discuss the entry conditions of the strategy.
To enter positions, the strategy looks for three conditions to be met.
The first two conditions rely on RSI, we require the RSI is less than 40 and two decreased by three. So, this would be like down here at this point.
The next entry condition relies on moving averages, I mean requires MA100 crosses above MA50. So, as you can see what’s happening here, the green lines crossing above the orange line. So once these two conditions are met, the trade would I trade will be entered.
Okay, so let’s go over the exit conditions.
So, the exit positions that the strategy again utilizes moving averages on the RSI. The first condition realized in the RSI; we require that is greater than 65. i.e., is being close to being overbought, which would logically indicate a logical place to end and exit trade, or exit a long trade I should say.
Cool. And the second exit condition lies in the moving averages. And we simply require MA9 to cross above MA50. So, these are two moving averages we looked at a minute ago, just like this red line crossing above the orange line.
And once these two conditions are met simultaneously, a trade will close.
Great. So now we’ll discuss the entry and exit conditions. Let’s take a look at backtesting. To remember earlier I told you the script is available on our trading View Profile. So, this is here catching the bottom. You see here we’ve got a description of entry and exit conditions. It’s just what we’ve been over but it’s here for your reference.
So, you can just come down, you can add this to your “favorite indicators”. Move this one here, or you can just copy the code from down here, I’m going to copy the code because it allows me to edit some inputs, which you might also want to do to get more get back-testing data, which is more aligned to your personal strategy. So, you just come to the chart you want it to run on base the strategy in here. And then you can say faith, we just added to the chart, if you want to try in a standard form, but I can just show you how to enter, change a couple of quick changes a couple variables. So, this is the data, essentially where the backtesting data will be from. So, I’m going to just going to change this from the start of 2022. That’s just one.
And also in its default form, it presumes each trade is using 100% of the equity. So, imagine if I have $100, this is having this at 100 presumes that 100% of the equity is allocated per trade, you could reduce this to 1020. Whatever really fits your strategy, just to get really accurate by testing data is in line with what you would traditionally trade with.
You also added the RSI decreased values as well, just these would be the entry conditions, you could edit these to try and hone the barriers to improve the strategy. But I’ve tested it with quite a lot of range of values. And I find that this work well. So, I’m just going to keep these in the standard form. A not important note here is this commission value here 0.1%. This means each trade will presume a commission of 0.1%, which is aligned with the base fee on Binance. So, let’s say you do trading on Coinbase, where the fees are a bit higher, you could change this to a different number. Essentially, to get more realistic by testing the results again for you, I’m just going to leave it as 0.1 because I trade on Binance. Cool. So, once you’re happy with this, look at the chart.
And you see you’re given some backtesting data for you. So, you can see me at 24.9% net profit in 16 trades and we were profitable 62.5% of the time. So, I’m trying to zoom in a bit here. So, you might be able to see from up here.
You can also just change the time frame up here. So, you can see actually perform better on the 15-minute time frame, strike five minutes, so I’ve made a loss. So, we do obviously we’d prefer the 15-minute time frame, I can also change the pairing up here, you can see that there will automatically change this test is on Bitcoin.
You can see him at a loss and 15-minute timeframe. In the 30 minutes, it performed better and made a profit Realty profit but 80% of the time, so obviously pretty good.
So, this would suggest that one Bitcoin performs better on the 30-minute than the 15 Minute. So, you can really play around with this with a lot of different timeframes pairings. You find one that really works for you.
I’m going to just come to Coinrule when I’m ready to run the strategy. And this is when you can decide what coin you want this to run on. So, if you want to take advantage of “any coin” scanner, which is as I said earlier, it’s quite powerful, because it will essentially scan the market for coins that meet these criteria, and then enter trades simultaneously on them. I’m actually going to use this here but if you wanted you can just have this run on Bitcoin. But yeah, as I said, I’m going to just have any coin, you also have to choose the timeframe that you wanted to run on. Remember, we saw with Bitcoin that they’re performing better on the 30-minute than the 15-minute. So, I’m just going to have this run on the 30-minute timeframe.
So, to change all this to 30 minutes, you can also quickly just come up here, I’ve already got the strategy loaded, but come up here, just come to search and type in Cash in the Bottom, and you will see here, you will have the strategy automatically loaded for you.
So, I’m also so once these conditions are met, I’m going to buy 100 US dollars of that coin from a USDT wallet as a limit order.
And then when the confirmation one has RSI greater than 65 in a timeframe of 30 minutes, remember, these are our exit conditions. And these are our entry conditions up here. Then I want to sell 100% of the amount bought of that coin with my USDT wallet as a limit order once execute 20 times in total, and we call this Catching the Bottom. So, once you’re ready, you click Launch you’re given a little preview of the strategy. And then once you’re ready, you’re happy with this you just click Launch.
There you go. Your strategy is now live. Thank you very much for listening to the Strategy of the Week video. I’ll hang around for a couple of minutes.
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