Zcoin (XZC) Cryptocurrency Strategy – 3L-R Trade PatternZcoin XZC 30m
The 3L-R reversal is a four-bar pattern and it means three lows (3L) followed by a reversal (R).
The main characteristics of this reversal chart pattern are the three consecutive lower low candles. The high price of these three particular candles doesn’t matter; the only thing that matter is that each low is lower than the prior low.
The fourth bar of the reversal chart pattern needs to have the high bigger than the highest high of the previous 3 candles. We’re not concerned about the low of the last bar.
Step #1: Identify Three Consecutive Lower Low Candles
The first component of this reversal pattern is the three consecutive lower low candles. At this point we’re not concerned about the highs of the three candles.
However, you’ll notice that most of the time each consecutive high is also lower than the previous high.
What is great about the Zcoin (XZC) cryptocurrency strategy is the fact that it’s designed to catch market reversals right at the moment they occur.
Step #2: The fourth candle breaks above the first bar high in the reversal pattern
The immediate candle after the three lower lows needs to be a bullish candle and secondly it needs to break above the first bar high in the pattern.
Normally, the highest high of the first three bars is made by the first bar, however, in the event that this is not the highest high we need to wait until the fourth candle breaks above the highest high of the previous 3 candles.
Note* It’s important that the 4th candle breaks above the first candle high, not the 5th or the 6th because that will invalidate the reversal pattern. We need to be very precise when trading reversal patterns like the 3L-R pattern.
Even though we said that we’re not concerned with the low of the fourth bar, it does matter if the low is higher than the third bar’s low. Through our backtesating results we have found out that this yields better trading performance.
Step #3: How to buy Zcoin: Buy if the fourth candle closes above the last three candles highest high
Before we pull the trigger and buy cryptocurrency Zcoin we need for the fourth candle to also close above the first candle high or above the last three candle highest high point, whichever that might be.
Now is the time to convert this reversal setup into profit and buy Zcoin when the fourth candle closes above the last three candles highest high.
Step #4: Place your protective Stop Loss below the 3L-R pattern low
Trading reversals have lots of benefits and among other things it offers us the possibility to really use a very tight stop loss. If the trade doesn’t work the market will tell you very quickly and it will produce only very little damage to your account balances.
Like with any reversal pattern, if you want to keep the stop very tight you need to place your protective SL below the reversal pattern aka below the 3L-R pattern low.
Step #5: Take profit should be at least two times bigger than your Stop Loss
If you trade this reversal pattern on intraday charts, it’s best to simply take profit once the Zcoin price will give you a return that is two times more than your stop loss. In other words, you have a risk to reward ratio of 1:2.
Alternatively, if you use higher time frames the exit strategy should be based on a trailing stop.
Note** the above was an example of a BUY trade using the best Zcoin XZC cryptocurrency strategy. Use the same rules for a SELL trade – but in reverse.
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