As 2017 draws to an end and with less than 36 hours left of trading, many like to reflect back on the biggest market moving or news worthy events. Without a doubt, Bitcoin and its stellar rally from just shy of $1,000 in January to flirting with $20,000 just a few sessions back, will make everyone’s Top 5 list. Bitcoin started to correct after failing to close above $20,000 and dropped below $11,000 at some point before mounting a snap-back rally. Now, Bitcoin is back on the retreat and with it many other crypto currencies such as Ethereum, Ripple, Litecoin and so on. This volatility has caught the attention of many market participants with the main question being how to profit from it.
While a forex trader could try and take advantage of the newly launched futures this month which track the price of Bitcoin without having to actually own them, there are better outside-the-box forex trades which can decrease the volatility of Bitcoin while allowing traders to ride some of the euphoria. One of the biggest problems for Bitcoin holders is how to use that virtual value of their holdings. It is rather difficult to exchange Bitcoins for cash which can be used to purchase items and there are not that many outlets which will let you purchase goods and services for Bitcoins. While this is changing slowly, real currencies will dominate for a while to come.
Those who have Bitcoins and who wish to diversify their assets in order to reduce the risk which is associated with crypto currencies should considering opening a forex trading account and fund it with Bitcoins. Many elite brokers, including PaxForex, allow traders to make Bitcoin deposits. Bitcoin volatility is expected to remain in place and very likely to increase. Just today, South Korea noted that it is considering the closure of at least one exchange. The countries Prime Minister also raised concerns over how Bitcoin is impacting the youth of South Korea. The Asian nation is Patient 0 when it comes to digital advancements and at the forefront of the Bitcoin craze. South Korea wants real-name crypto currency transactions which would violate the anonymity of crypto currencies.
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While the anonymity has attracted many speculators, as Bitcoin is moving more mainstream it may be dragged into the regulatory net. The head of Asia Pacific Trading at Oanda, Stephen Innes, stated that ‘Regulators are getting so concerned that this is primarily and predominantly a retail phenomenon.Regulators not only in Asia but globally are going to start addressing this fact because I don’t think they’ve actually come to terms with what the absolute downside of a complete drop in crypto means for the economy.’ Here are three ways how forex traders can profit from the Bitcoin volatility using forex trades.
Forex Profit Set-Up #1; Sell AUDSGD - H4 Time-Frame
Since Bitcoin is a very exotic and exciting digital currency, we will look at three exotic currency pairs in order to match the appeal of the trade. Let’s start with the AUDSGD which is currently trading inside of its horizontal resistance area which prevented a further advance. As price action is nearing the lower band of its resistance area, a breakdown is likely to occur which will take this currency pair down into its ascending support level. Forex traders should further monitor the AUDSGD as momentum may be strong enough for another breakdown and sharp move to the downside.
The CCI already completed a breakdown from extreme overbought conditions and is currently descending towards the 0 mark. A move below it will confirm the momentum change from bullish to bearish and open the way for further downside. Download your MT4 trading platform today, deposit your Bitcoins and add this trade to your portfolio.
Forex Profit Set-Up #2; Buy EURZAR - H4 Time-Frame
While the Euro has enjoyed an overall bullish drive, the EURZAR has corrected over the past few trading sessions which gives forex traders who missed the Euro rally an excellent entry point to go long. This currency pair has halted its correction and formed a new horizontal support area from where it stared to reverse. A breakout above the upper band of its horizontal support area should take the EURZAR into its descending resistance level from where more upside is possible, if bullish momentum will be strong enough.
The CCI has formed a positive divergence after breaking out from extreme oversold conditions below -100 which has confirmed solid bullish pressure in this trade required for a breakout. Stay up-to-date with the latest trading recommendations from PaxForex and profit alongside our expert analysts with each trade.
Forex Profit Set-Up #3; Buy USDSEK - H4 Time-Frame
The US Dollar has been under pressure for an extended period of time, but USD bulls are surfacing and the USDSEK offers a great buying opportunity either to go net long or to hedge other USD short positions. This currency pair is testing its horizontal support area, while being chased to the downside by a steep descending resistance level. A double breakout could materialize which would lead to a short-covering rally and push the USDSEK back towards its horizontal resistance area. Downside potential from current levels remains limited.
The CCI has pushed above the -100 mark and away from extreme oversold conditions while also forming a positive divergence in a sign of expanding bullish pressures. Follow the PaxForex Fundamental Analysis section and boost your profits in 2018, earn over 500 pips per month, delivered by your PaxForex experts.