How do we Define Trends in the Crypto Market?

Trends In Crypto - Finwatchers

People buy and sell assets in any financial market or securities like bonds, when the market goes live. Apart from buying and selling, there is no other button to press while trading or investing.

The battle between buyers and sellers creates volatility in the live market. The chaos lets several people make decent profit as per their convenience.

Buyers and sellers are two major roles in any financial market, dominating the market trend.  People may get confused when they hear the word ‘trend’.

If you fall into the same confusing category, don’t worry, this happens mostly due to lack of knowledge and that’s exactly what we're going to tell you.

Let's take a dive and understand what are trends and what are their types?

 Is Trend an Opportunity for Investors/Traders?    

Trends become one of the most significant measures during any financial market or securities forecast. Only the trend is formed due to the buyers and sellers.

The trends reflect when any party (buyer or seller) dominates the asset price in their favour. In layman’s terms, the trends refer to the overall one-way direction of the market momentum.

There are three types of trends present in in both Crypto and Financial Markets:

  • Bullish/Uptrend 
  • Bearish/Downtrend 
  • Sideways/Non-trend 

Explanation 
Bullish/Uptrend:

In Technical analysis, the price action of Cryptocurrency draws the higher swing lows and higher swing highs on the price graph.

In a bullish trend, buyers or bulls make attempts to dominate the asset in their favour and they manage to buy each dip whenever it happens. We can also find trends easily by using trendlines. 

Bearish/Downtrend:

The downtrend sounds the same as fall in price, and it is. At this point sellers play a key role to dominate the crypto’s price in their favour. Price action displays lower swing lows and lower swing highs on the graph.

Bears sell the asset on each rise; therefore, buyers fail to break the previous swing high, and downtrend occurs. The Bearish trend is the scariest part of investing. Amid downtrend, investors cannot make money. 

Sideways Trend:

Sideways trend is the worst trend for buyers or sellers. In a sideways trend, the directional trend is not confirmed until the price breaks the range-bound phase.

In this trend, both buyers and sellers attempt to dominate the asset between support and resistance, so the price fluctuates in a narrow horizontal range.

Investors should avoid the sideways trend, because there is no dedicated time limit for this term of trend. It may take a week, a month, exceeding a year also to give a directional trend’s confirmation. Only hedge investors can make money during a sideways trend or range-bound market. 

“Trend is Your Friend” Is it true? 

Most big investors believe in trends, they follow the famous quote “trend is your friend” while investing. Amid any trend, you can easily make money if you know the right time to exit and enter. In addition, the time frame window matters to predict the further trend of Cryptocurrency. 

Also, the trendlines help to identify the trend as a quick way to display it on price graphs. Short time frame helps to find shorter trades; besides, the higher timeframe helps to predict long term view for investment.

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Disclaimer:
This information is for educational purposes only and does not constitute investment advice. No person should rely on it to make any investment. Investing carries risks, including the loss of capital. All opinions expressed are subject to change without notice. Past performance is not indicative of future results. Always seek the advice of a licensed investment professional before making any investment.