The parabolic price trend of Ethereum due to “not much supply” does make sense.  However, whether it will continue through 2022?  The expectation is the price will crash, because those who have been waiting to enjoy the financial incentive of holding, will cash out their benefit. When holders sell, then more of ETH will be released in the market, and this will eventually lead the price to crash.

For those who are prospecting to buy, ETH crashing is a good reason to buy and a competitive entry point. The fundamentals of Ethereum are still strong.  And, it still qualifies to work well as a long-term investment.

The Federal Reserve cautioned that they might roll back to pandemic-era stimulus measures to combat rising inflation and eventually the entire crypto market trends towards a massive sell-off. News about Kazakhstan unrest also contributed to overall volatility in the cryptocurrency market. Despite all the reasons, Ethereum is still a smart buy.

The Ethereum parabolic refers to the parabolic curve.  When ETH goes parabolic, it is climbing all the way up to the high and them collapsing all the way down.   This can happen in a market situation where a price correction is taking place.  For clarity, a plane curve generated by the price point moving on the trend graph through ups and downs.

Parabolic price moves are important as the price of the asset moves up exponentially.  The price going up really fast is a time when investors will develop confidence in the asset and would want to buy and those who are already holding might want to cash out substantial profits.  Buys and sells happen in increasing numbers and transaction volumes are also significantly good when the trend chart shows a parabolic move.

When a parabola is formed the price will go back to its pre-price breakout and therefore short-selling is very commonly seen when this trend shows up.  A parabolic move happens when investors are trading a news.  When the trend is due to a news it is important to identify if it is pump where insiders are trying to fluff up the price of the asset.  When the news is caused due to a fundamental change, it will show up in the stock price for a long time.  When the price is going parabolic if it is related to a hype-motivated press release the trend might not last for long. Whether the pump triggered by the news is genuine is determined by whether the news version is exaggerated or not.

Though it sounds ridiculous many times exaggerated news does work the trick for investors at least for the short-term.

The parabolic indicator generates buy or sell signals when the position of the dots moves from one side of the asset’s price to other.  This means that if the price is rising initially, but then moves sideways, the PSAR will keep rising despite the sideways movement in price.

SAR refers to – Stop and reverse.  Parabolic SAR is an indicator that is used by technical traders to spot trends and reversals.

The parabolic indicator generates buy or sell signals.  When the position of the dots moves from one side of the asset’s price (high/low) to the other(low/high).

A buy signal is when the dots move from above the price (high) to below the price (low), while a sell occurs when the dots move from below the price (low) to above the price (high).

Active traders find the parabolic indicator appealing because the indicator works very well in trending markets where there is a large price move and the traders are able to make a significant gain.

When the price of the ETH is moving sideways the PSAR will continue to be rising, regardless of the sideways movement of price. However, at some point in time a reverse signal will be generated – this will happen even if the price has not dropped, thus it does not mean that the price is reversing. When the asset price is range bound and the parabolic indicator is used alone, there are risks of multiple low profits and low trade.  Since the parabolic indicator creates a new signal each time when the ETH price moves to the opposite side of the asset price it is important to use this indicator with other technical indicators.