Ethereum Classic is an open source, decentralized, blockchain-based distributed cryptocurrency platform that runs smart contracts. Ethereum Classic emerged as a split version of Ethereum. It is the 17th cryptocurrency in the World with a total market cap of about $2.0 billion. Its ticker symbol is ETC.
In our trading strategy, we outline the Fakeout-Shakeout pattern which sets up in any market at any time frames.
Steps to consider when trading Ethereum Classic (buy side):
Identify a clear trading range zone followed by a breakout below the support level
The idea behind the Fakeout-Shakeout reversal pattern is that we are looking for an area of consolidation or range trading followed by a false breakout which is brought about by institutional money. A trading range is defined by price moving back and forth between clear support and resistance levels. A valid Fakeout only needs enough bearish momentum so that we can break below the trading range.
Identify the starting point of the Fakeout movement
A false breakout is confirmed when the market starts recovering and breaking above the starting point of the sell-off. Mark on the chart the bearish candle that started the sell-off. Look for the most prominent bearish candle within the downward movement. The stronger and faster the recovery happens, the stronger the reversal pattern becomes.
Place a limit buy order above the candle’s high identified as step 2
The Fakeout movement is designed to fool trader into believing the market will go down when the real intention is to move the market up.
Place your protective stop loss below the “Fakeout low.”
The initial stop loss is placed at the swing low developed during the Fakeout-Shakeout phase.
Define a take profit level
Take profits when the bullish momentum fades away. The bullish momentum fades away when the price either starts to consolidate again or when big bold bearish candle starts to develop on the chart. Alternatively, you can monitor new swing low points as they are formed and trail your protective stop loss below these swing points.
The same rules apply during a sell trade of the Ethereum Classic.