People who are interested in trading Bitcoin must learn to read about the crypto charts. Trading charts may seem different from beginners and look like a foreign language. The lines, colours, shapes are quite confusing and can make it difficult for beginners to understand. Learning and understanding technical analysis requires users to learn the terminology connected with trading. Crypto trading is the same as stock trading, but the only difference is the asset. Trading requires users to completely under the psychology of the market.
At first, the users get to see success on the path of the experienced traders that have trained their skills for many long years. The best thing about trading bitcoin is that you learn to grade, and you can get expertise in trading different asset classes. The first step towards the journey of becoming a bitcoin trader is to understand the basics of trading. You need to learn and practice the terminologies and key theories of bitcoin trading. You need to practice learning and to understand pattern recognition and different types of charts. In trading, the market history repeats itself, and this allows the beginner to analyze past trends and make an attractive decision on the market trends of the future.
How to analyze the bitcoin market?
In terms of technical analysis, an individual needs to focus on the price of the bitcoin. To focus on the coin’s price, the individual needs to use the technical indicators and must not consider the outside variables contributing to the price. The main thing that one needs to learn is to remove emotions or feelings while making a decision.
Here, in this article, we will understand the 3 Market Movements and 3 Market Phases that makes the six tenets of the Dow Theory.
3 market movements
The primary trend is depicted by the main movement and is currently under progress. The main movement includes the activity of years of market. The major trend is counted as to be bearish or bullish, and it depends on the time frame that is included in the analysis.
The medium swing is the second reaction of the market. It lasts up for at least three months. It also includes the retraces of price. A retrace of the cost is when the bitcoin market movement starts to return to its original state. In some cases, a price retrace returns to typically 30-60% of the cryptocurrency’s original market value.
Short Swings are the price fluctuations that take place daily. It even lasts up to one month in some cases. The short swings are the minor movements that occur because of the market conjecture. The bitcoin market is unpredictable; therefore, it experiences short swings regularly.
3 Market phases
The phase of accumulation occurs at the time when experienced investors get some valuable information that is related to the change in market situations. The valuable information can include the noteworthy facts obtained from the company’s insiders or from other sources that could influence the market. As a result of the information, the knowledgeable investors either start buying or selling bitcoins or other assets.
The absorption phase takes place when the public starts to notice the market trends that are emerging. The concern of the general public leads to more activity in the market. As a result, more and more investors analyze the main movement. The general public’s scenario being noticing and investors jumping on board lead to assumption stimulated by Fear of Missing Out (FOMO).
Here the emotions play a crucial role in understanding the behaviour of the market. If the market starts sinking, the investors panic and get worried or scared about selling their bitcoins. Contrasting, if bitcoin’s value rises, then there’s a line of new investors trying to enter the market and invest in bitcoins.
In the distribution phase, the investors tend to reintroduce their holdings to the general public. They have earned bitcoin profit, and now they begin leaving their positions before the value…