Trading the cryptocurrency market using chande momentum oscillator

Chande Momentum is an oscillator indicator.

As an oscillator indicator,Chande Momentum oscillator was created by Tushar Chande with the main objective of helping cryptocurrency traders to know the direction of the market as well as whether the market is in an overbought or oversold condition by showing the momentum of cryptocurrency. As an oscillator indicator,it is considered to be similar to relative strength index. Just like in other oscillator indicator, Chande Momentum oscillator also has an oscillation at point 0.00 ranging from -100 to 100

According to Tushar Chande, Chande momentum oscillator is therefore calculated using the following formulae;

Chande momentum oscillator = (Sum of higher closes over a given period-sum of lower closes over given period)/(Sum of higher closes over a given period+sum of lower closes over a given period)

Therefore,since chande momentum oscillator is based on divergence,it can therefore follows that when the cryptocurrency market is moving downwards while the chande momentum oscillator curve is moving upwards,then the market will reverse and start moving upwards in the same direction as chande momentum oscillator.On the other hand,if the market is moving upwards while chande momentum oscillator is moving downwards,then the market will reverse and start moving downwards in the same direction as chande momentum oscillator.We will not use indicators to further explain this since it follows the volume based indicators. 

1. Oversold cryptocurrency chande momentum oscillator

Since chande momentum oscillator is based on overbought and oversold and it has an oscillation at point 0 ranging from -100 to 100,it therefore follows that when the chande momentum oscillator falls below -50,then that will be an indication of an oversold in the cryptocurrency market thus signaling the cryptocurrency trader to purchase a given amount of cryptocurrency with their USDT balance. The cryptocurrency trader can place a market buy order which will be processed instantly or they can place a limit buy order which will be processed when the price in the market reaches their limit buy order.When their order is being processed,their account will start increasing in value if the market is moving upwards. This is indicated as from the candlesticks chart below;

The above represents the TRX market in terms of USDT. In the analysis,two points are being indicated.There is point A and point B. Point A represents the chande momentum oscillator while point B represents the oversold point position. At point B, the chande momentum oscillator has fallen below -50 at below 0.00 thus an indication of an oversold point over there.This signals the cryptocurrency trader to purchase a given amount of TRX with their USDT balance. The cryptocurrency trader can either choose to place a market buy order or a limit buy order. The market buy order will instantly be executed while the limit buy order will be executed when the price in the market reaches their limit buy order.

2. Overbought cryptocurrency chande momentum oscillator

Since chande momentum oscillator is based on overbought and oversold and it has an oscillation at point 0 ranging from -100 to 100,it therefore follows that when the chande momentum oscillator rises above 50,then that will be an indication of an overbought in the cryptocurrency market thus signaling the cryptocurrency trader to sell a given amount of cryptocurrency which he had previously purchased and is currently holding so that their account do not depreciate in value. The cryptocurrency trader can either place a market sell order or a limit sell order. The market sell order will instantly be executed while the limit sell order will be executed when the price in the market reaches their limit sell order. This is indicated as from the candlesticks chart below;

The above represents the TRX market in terms of USDT. In the analysis,two points are being indicated.There is point A and point B. Point A represents the chande momentum oscillator while point B represents the oversold point position. At point B, the chande momentum oscillator has risen above 50 at above 0.00 thus an indication of an overbought point over there.This signals the cryptocurrency trader to sell a given amount of TRX which he will have previously purchased so that their account do not start declining in value. The cryptocurrency trader can either place a market sell order which will instantly be processed or they can place a limit sell order which will be processed when the market reaches their sell limit order.

Cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.

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