Forecasting the movement of the price of securities helps identify a line which will connect the common price points consisting of highs or lows at a particular point in time. The patterns created by trendlines and curves help anticipate the future direction of a security price. The trendlines and curves can lead to simple and complex formations.
Areas of support and resistance are identified by connecting a “series of descending peaks (highs)” or “ascending troughs (lows)” – peaks are high points and troughs are low points.
The trendlines will tell you a different story depending upon the price points you choose to connect. When you connect the highs you get to tell a different prediction story, and when you connect the lows you get to tell a different prediction story.
Whether you connect the highs or lows, you need to work with at least 3 or more points. Anything less than that like two is not practically fit enough to develop a price prediction story.
When does an uptrend happen? When the price points are touching higher highs and higher lows – an uptrend line can be derived. A support level for a particular price is predicted when two or more of “higher low” prices are connectable.
When does a downtrend happen? When the price points are touching lower highs and lower lows downtrend happens. When at least two of the “lower highs” are connectable that indicates the resistance level for the particular price.
When does a consolidating trend happen? A consolidation or a sideways market happens when the price is oscillating between the upper and lower range. This usually happens between two parallel and mostly horizontal trendlines.
A question arises as to whether the price of Bitcoin is high or low? Typically, the price of Bitcoin keeps fluctuating. So, for practical purposes Yesterday’s low and high from coinmarketcap or any other reliable source is taken. For instance, $40,961.10 (opening price) / $42,126.30 9 (closing price) the change in price in terms of percentage from yesterday at 0.31% – indicates the price change. So, if you have invested in BTC on a particular date, the percentage change whether up or down from the time you have made your investment will tell you whether the value of your BTC has growth with respect to your “point of entry price” – so the common approach is to sell the BTC or any other asset when the price goes up than what you have bought it for to make profits.
Holding BTC forever is an ideal and conservative approach. This is also true with Altcoins and other asset types. Any investor who is working without greed, while making regular profits through the highs and lows – buying the dip and selling the high frequently and periodically is a true winner. Holding forever until the grave might not suit an average retail trader.
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