Last week, Bitcoin strengthened enough to break the $ 32,000 monthly resistance level, and has been on the rise ever since this article was written. Whether that means the bear market is over remains to be seen. However, what we are seeing now is an opportunity to buy that can be very attractive to investors.
One of the biggest mistakes of any novice investor is hunting the bull market, which can put your portfolio in a precarious position. This is especially true if you did not do your due diligence before investing. This series of articles aims to enable novice merchants to understand cryptocurrencies so they can make smart decisions and mitigate risk effectively. One of the key points to understand is how to look for signs of reversal, which will almost always be a critical trading point.
What is a turnaround?
A reversal refers to a change in the direction of the property price. The reversal can move up or down, depending on the previous direction of the property’s value. The reversal only applies to overall price guidelines and not to individual periods on the price chart.
The turning point is a critical trading point because it determines whether it is time to increase your market position just before the bull market or sell your positions before bear market. Trading during the reversal will either maximize your gains or minimize your losses depending on the reversal trend.
How to detect a reversal?
Although the crypto market is generally unpredictable, it is possible to rule out possibilities by looking at historical data to determine the likelihood of a reversal. This is done by identifying key points on the asset chart. Some key points to look out for are:
- Support levels
- Resistance levels
Support levels will determine how low the value of an asset falls before it returns (when investors buy a fall). Resistance levels will determine the upper limit of the asset price (when investors make a profit). These points can break and will often signal when it is a good time to buy or sell positions in a portfolio as this will mark a trend.
Key point analysis requires experience and you are likely to make mistakes as you learn how the market works. This is especially true given the fact that novice traders are usually influenced by market conditions and the dilemma of holding, buying or selling.
These key points will often form patterns on which you can base your decision. Some key patterns that mark a market reversal are:
Head and shoulders marked as failed
- Double tops
- Double bottom
The general rule of crypto-trading is that merchants should use the data available to them to weigh the risks and benefits of their proposed trade. Not only this, but it will help traders get into the habit of a data-based approach.
Investors may also consider cryptocurrency mining instead. This minimizes the risks associated with trading, because regardless of whether the market goes to the bull market or not, miners will continue to increase their market positions. This is especially true for people who are miners DogecoinBitcoin and other evidence of cryptocurrency performance.