Understanding cryptographic charts is an important skill both for direct trading and predicting things that will happen in the long and short term.
Cryptocurrency market analysis starts with an analysis of the underlying market trend. There are three types of trends.
- Long-term is a major trend that lasts at least a year. It can be bullish or bearish.
- Intermediate can last from ten days to three months. It typically retraces 33% to 66% of the primary price change since the previous average swing or the start of the main move.
- Short swing is about changes that are related to the current market speculation, from some hours to 1 month.
Then we go deeper to analyze the phases of market trends.
phase is the period when smart investors start buying or selling an asset contrary to the market's situation. During this phase, the price of the asset does not change much because there are a few of these investors.
The public participation
phase starts after the point when the market finds these smart investors. More and more people are following these trends until rampant speculation begins.
phase goes right after huge speculation due to the limited supply of an asset. Its price begins to recover when smart investors begin to distribute their assets to the market. As a result, prices begin to drop along with volume. For example, the current fall of Bitcoin price isn't a long-term trend, and it is very similar to the distribution of assets.
When analyzing, it is important to understand that trends are most often confirmed by volume. Volume should increase with price in an uptrend as an example. During a downtrend, volume decreases with a price decrease.
We have figured out the general analysis of trends and phases. Let's get to know more about technical analysis right now.