Why Crypto Investors Must Study Price Action

[nyarkoforex]

Price action is the history of price movements within a specified time period. It is the pictorial view of market sentiment, showing what transpired between buyers and sellers. Below are some benefits of studying price action as a crypto investor

Trend Identification

Price action analysis helps investors easily identify market direction.It is easy to spot whether the market is bullish, bearish, or ranging—at a glance.

Predictable Patterns

Through price action, certain repeated patterns that lead to parabolic moves and trends in the market can be identified and used to make informed decisions.They are reversal patterns and trend continuation patterns;

• Reversal Patterns – These patterns starts a new trend. Examples include double top, double bottom, head and shoulders, inverse head and shoulders, cup and handle, bullish and bearish engulfing, shooting star, and pin bar.

• Continuation Patterns – These patterns shows continuation of the trend after consolidation or pullback. e.g. bull flag, bear flag, bull and bear pennant, ascending and descending triangles, and measured moves.

Entries and Exits

Investors can use price action to time the market, entering at low points and exiting at peaks to maximize gains.

Risk Management

Price action allows investors to assess risk and reward before investing. By using support and resistance levels, they can determine safe entry points within their risk appetite and identify optimal points for taking profits.

Misleading Retail Investors with Fundamentals

News and narratives can be misleading because market makers know that most investors base decisions solely on them. Sometimes, they move the market against the news. Positive news can lead to a market drop and vice versa. However, price action can reveal these moves in candlestick patterns before they happen.

These benefits make price action analysis a necessary skill for crypto investors.

See y’all!

Posted Using INLEO

Comments

[hivebuzz]

Congratulations @nyarkoforex! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)

	You received more than 50 upvotes. Your next target is to reach 100 upvotes.
	You made more than 10 comments. Your next target is to reach 50 comments.
	You got more than 10 replies. Your next target is to reach 50 replies.

_{You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP}