Bitcoin and Ethereum might be the two top cryptocurrencies by market cap, but according to a “parabolic” high timeframe signal, Litecoin and XRP could soon lead the market higher.
The lack of the technical tool being triggered in BTC and ETH suggests that these two front runners could lag behind the lower-ranked altcoins. Here’s a closer look at why.
Explaining The Parabolic SAR In Crypto
Cryptocurrencies are known for their impressive, parabolic rallies, that later causes prices to reach extreme overvaluations. When the parabola breaks down, the trend tends to reverse into a brutal bear market. Understanding when these trend changes occur is the key to being profitable in the crypto market.
Certain tools are designed for just this purpose. For example, the Parabolic SAR tells a trader when a trend has “stopped” and “reversed.” It was created by J. Wells Wilder, Jr., who is the father of several popular technical tools, such as the Relative Strength Index, Average True Range, and more.
Using this tool on the 1M timeframe across top crypto assets ranging from Litecoin to XRP, and Bitcoin to Ethereum, shows that only LTCUSD and XRPUSD have tagged the Parabolic SAR. Based on the tool’s design, this should mean that the downtrend in these assets has stopped and reversed.
Why Litecoin And XRP Could Lead Bitcoin And Ethereum
Litecoin and XRP leading the crypto market recovery is unusual. Bitcoin and Ethereum each set dramatic new all-time highs in 2021, while LTC and XRP didn’t. This could be contributing to the signal being triggered earlier than in BTC and ETH.
LTC and XRP sellers could be significantly more exhausted having suffered through a much longer drawdown from all-time highs. Each of the two altcoins drastically outperformed Bitcoin and Ethereum in 2017, so the scenario is not impossible — it just isn’t something we’ve seen in six years.
For Bitcoin and Ether to trigger the same signal BTCUSD will need to reach nearly $42,000 per coin, while ETHUSD will need to trade above $3,300. These targets are still a distance away, compared to Litecoin and XRP which have already caused the SAR to move below price action.
At this point, the tool can be used to set a trailing stop loss, placing a stop loss order at the SAR indicator. When tagged, it stops the trader out at a point where there is a higher probability the trend has stopped and reversed.
#Litecoin and #XRP each tagged the monthly Parabolic SAR#Bitcoin and #Ethereum did not
I expect LTC & XRP to lead pic.twitter.com/om0YDQGKBq
— Tony “The Bull” (@tonythebullBTC) July 20, 2023
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