How to Analyze Price Movement

With the start of the year, cryptocurrencies have continued its downward movement which started near the end of last year. Some analysts have again raised the warning that a bear run is starting. While these predictions may eventually become true, what should you do when you hear such news? Read on to find out.

Price Charts show everything

1. Read The Charts – The price charts are an accurate representation of what is actually happening. It is not based on emotion and is not relative to anything. Everything from consumer sentiment to price manipulation can be seen by analysing charts. So how should you read the charts?

2. Look at Bigger Time Frames – Before making decisions, make sure you look at historical data that are months and even years in the past. There may be cyclical trends you may not be aware of and the price dip you are looking at, may just be a normal correction in the grand scheme of things.

3. Look at Smaller Time Frames – Smaller time frames in days, hours and even minutes can give you information on what is happening currently. While most of it can be distracting, you should still look at it right before a buy/sell decision so you can place your order near to current market conditions.

4. Be Aware of Fundamentals – In the crypto world, this includes project announcements, regulations, implementations and related news. Be aware of these events as they may bring about price movement but read everything with a grain of salt. Always check price charts to confirm your analysis as there are always multiple factors affecting the market.

In summary, the best way to understand price movement is to view it in the context of a price chart. For a recent example, look at all the news outlets currently reporting the downward spiral of Bitcoin. If you don’t look at the bigger chart or only look at recent daily data, it’s easy to believe this doom and gloom. However, if you check the monthly chart, you will see that the current BTC price is just about near Sept 2021 levels. It has not even reached the low levels of July 2021– much less the 2020 levels before the 2021 bull run. See example below of the price chart as of this writing, accompanied by the usual doom and gloom article when price goes down:

Doom-and-gloom headline (lower left), actual reality in the chart (top)

Therefore, as is my usual suggestion, keep your head on your shoulders and look at the charts. A bear run may eventually come but you should see this through the charts— not through news articles.

WISH Pool is the creator of Cardano SPOT Check, an online resource for Cardano Stake Pool Operators for maintaining their nodes. We are actively helping several Cardano communities and was a recipient of IOG’s second delegation round in 2021. If you like this article, we would greatly appreciate if you delegate your ADA to WISH Pool. You will be earning interest rewards while indirectly helping the lives of disadvantaged children. This is because WISH Pool pledges to give at least 10% of its own profit to educational charities so that successful students can help get their families out of poverty. Let’s help grow the community together!

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