This signal uses the 4 week rate of change on BTCUSD/XAUUSD (bitcoin vs gold) ratio to assist in creating a highly accurate, simple and consistent Bitcoin trading strategy. The idea stems from Bitcoin being a risk on asset and gold being a risk off asset, thus explaining why the two assests are uncorrelated. This is inspired by Michael Gayed's (@leadlagreport) lumber:gold risk on/off signal for stock market returns and first made as a joke by Michael Silva (@mikepsilva) as the "Saylor to Schiff rotation strategy."
When the 4 week rate of change crosses below 0, it is a sell signal, when it crosses above 0, it is a buy signal. I have marked these on the chart in Red and Green respectively.
The orange lines are the false/failed buy signals and the purple lines are the false/failed sell signals. False signals can be easily avoided using a sound trading strategy.
As is displayed, all the false/failed buy signals can be avoided by waiting for the following weekly candle to also close green as confirmation. The false/failed sell signals can be avoided by using a trailing stop loss below the low of the previous weeks candle for long positions or accepting small losses for short positions by using a stop loss above the previous weeks candle, waiting for confirmation of a sell signal results in too many missed gains for short positions, so it may better to accept the infrequent small losses when the sell signal is false/failed.
When the 4 week rate of change crosses below 0, it is a sell signal, when it crosses above 0, it is a buy signal. I have marked these on the chart in Red and Green respectively.
The orange lines are the false/failed buy signals and the purple lines are the false/failed sell signals. False signals can be easily avoided using a sound trading strategy.
As is displayed, all the false/failed buy signals can be avoided by waiting for the following weekly candle to also close green as confirmation. The false/failed sell signals can be avoided by using a trailing stop loss below the low of the previous weeks candle for long positions or accepting small losses for short positions by using a stop loss above the previous weeks candle, waiting for confirmation of a sell signal results in too many missed gains for short positions, so it may better to accept the infrequent small losses when the sell signal is false/failed.