Cryptologist regularly speaks about trends in the increase or decrease of digital assets, and predict which can be difficult because of the high volatility. Over the years, with varying success, after December 2017, the market remains in a bearish mood, which has reduced the value of bitcoin from $21,000 to $6,000. To predict the upcoming trends when the crypto asset will go up or down, is extremely difficult. To do this, use technical analysis with indicators, which are taken from piatogo trading.
The cryptocurrency industry has used to separate itself from classical economic system and ignore many laws, techniques and methods that have worked successfully in familiar to all the world. This is not surprising because digital assets is excessively dynamic and atypical for compliance with the established norms of the financial system. However, on the stock exchange traders use adopted in Fiat to trade technical analysis with indicators for the measurement of assets and their actions.
We have already talked about most commonly used indicators in the cryptotrading, among them volume, zigzag, RSI, moving averages, МАСD, CCI, ADC and DI. These indicators are applied regularly exchange players. But, as with all technical indicators do not reflect the reality in 100% and show only what was already. So capturadora constantly experimenting and using all sorts of other indicators for more accurate analysis.
Not so long ago, «joke», began to apply a system of indicators Arun from classic technical analysis. In Vietnam trading on the popularity of Arun can be compared to the aforementioned known MACD or Stochastic oscillator («Stochastic»). Now the indicator has reached the cryptocurrency industry, and one of the columnists of the portal Medium helped to predict the long-term trend for bitcoin and increase the value of their assets.
Understanding of the indicator Arun
In 1995, an American engineer of Indian origin Tushar Chand after a long trading for more convenient calculation of upcoming indicators invented the indicator Arun (Aroon). The name was taken from Sanskrit and translates as «the early light of dawn». On the idea of Chanda, the pointer should indicate the point of origin of a trend and its termination.
Knowledge of the strength of the current trend gives the analyst an advantage and a vision of what he can count on increase or decrease in prices for a relatively long period. For example, if a trend is not observed and the market or financial instrument is at the stage of bidding, an analyst with Aruna prevents action at a time when the future fate of the instrument is less predictable.
How does Arun
The complex technical indicator Arun consists of two periodically intersecting lines and oscillator that displays the interaction of these lines. A pair of reference lines includes the upper Arun — Aroon Up and lower Arun — Aroon Down. Still have the oscillator indicator that shows the difference between lines within a relatively narrow market corridor.
Consider the chart of the trading pair BTC/USD for November 14, 2018. Data presented are from the portal TradingView, where the sequential transition sections «Chart» — «Indicators and strategies» — Builtin — «Arun» there will be two triangular or broken lines, which, unlike the smooth sine wave, it is convenient to use for calculation of the indicator. In this image the orange line is the Aroon Up when the appreciation of cryptocurrency, the blue line is the Aroon Down, it characterizes the reduction of the cost.
Schedule of the trading pair BTC/USD for November 14, 2018. The only negative data TradingView is that in the dynamics there is no third indicator is the oscillator. Source.
To compute all three values (Aroon Up and Aroon Down oscillator) only needed one parameter — the period of calculation. Orange Aroon Up displays the number of days from the beginning of the period to the absolute maximum in the period. The value of the Aroon Up is measured relative to the maximum value is 100. November 14, 2018, as seen in the chart, the indicator multiple times have achieved the highest indicators.
Aroon Up can be calculated by a set formula, in which:
N — period of the indicator;
H — the number of days after the absolute maximum in this period.
For example, when analysing a period of 10 days, the value of the Aroon Up will be (1-1)/10)100=90, if 2 days ago, ((10-2)/10)100=80 and so on.
The principle of the calculation of the Aroon Down is similar to the upward Arun. The only thing you need to take the number of elapsed days absolute maximum, not the maximum period. This is the formula:
Arun oscillator is counted by subtracting Aroon Down from Aroon Up. The upper and lower Aruna can only take values from 0 to 100, the oscillator may range from -100 to +100.
Conclusions according to the calculations of the indicator
After the calculation, the indicators will give the following signals with ranges on the basis of which it will be possible to draw conclusions about the trend.
The blue line in the range of 70 to 100 is a signal of a strong uptrend;
From 50 to 70 — strong trend there, but the development potential is still very large;
From 30 to 50 — uptrend ends;
From 0 to 30 — uptrend no.
For a downtrend remain the same indicators as for rising from 70 to 100, from 50 to 70, from 30 to 50, from 0 to 30. In this case, the analysis takes an orange line.
Therefore, when the presence or absence of both trends when the metrics are above 70 or below 30, this trend is not. Probably at this point in time the market is flat — the period when the asset price does not rise and not fall, or there is a period of prolonged fracture older trend.
If both lines Aroon Up and Aroon Down is below 50, then no trend changes are not expected, in this case, traders are most profitable to apply to the flat tactics.
In the case that both the lines intersect at values above 50, there is a change of trends, therefore, there is a chance to discover a bargain at one of the best prices.
If trading the default set is the oscillator, to draw conclusions on future trends is even easier. The very position of the oscillator depends on the location of Agoop Up and Aroon Down. Than the oscillator will be above or below a Central zero line, the stronger the upward (or downward) trend; if the oscillator is at zero, then there is a period of trading and there is no trend.
Indicator Arun in tactics
Capturador under the name «Crypto Otsukimi» in his blog on the Medium tells about the use of Haruna and that supposedly the use of this indicator allowed us to better calculate trends. After the experiment with many trading indicators punter says that he ran into Arun, and have not seen the practical applications of cryptocurrencies.
«About the indicator is the main article, but I haven’t seen Arun seriously used cryptotrading. Once this was done someone for jokes, they laughed at him, I saw it and I wanted to try. So I started to test a new indicator of technical analysis,» writes Crypto Eskimi.
The third component — the oscillator, the trader called spectrum and compared it with the axis (Z) in the chart XYZ. The introduction of this measure on the spectrum may determine its durability. As a rule, the higher the line Z on the spectrum, the higher the power, the smaller, the lower the power.
The oscillator, or the line Z, is exactly in the middle of the indicators and divides them into two parts for 50 units. Source.
Trader advises for Arun to use a standard that is 14 units: 14 days, 14 hours and so on, because this measurement is most convenient. «But, of course, you can adjust the parameters for yourself. Higher unit should give peak identification of the trend while smaller units can be used for potential scalps», the article says Crypto Eskimi.
Indicator Arun with his three lines shows a cross — blocked price movements that are ready to move up and change the price action. Arun usually helps to see, whether there will be a new trend. Aroon Down Cross bearish cross, Aroon Up Crooss — on bullish.
Arun is also suitable for calculating short and long positions. The first graph shows a long position and the cross. As a trader said, the day before the entrance you could take a potential position (to use their own risk management and application), and the next day after crossing the results on a graph would yield more than 11%.
A long position and the cross. Source.
On the second chart illustrates short position. Candle before the cross was maintained in the trade, but still wanted to cross it. Bringing the cross to bear short will give a profit of approximately 19%, the trader expects.
Short position and the cross. Source.
Overall, as demonstrated by the trader, with the help of unusual for the cryptocurrency trading indicators of technical analysis it is possible to calculate the required indicators and obtain even more profit from the assets.