In the field of cryptocurrency investment, grasping the market's tops and bottoms is crucial for investors. This not only helps you avoid the risk of buying at high levels but also allows you to seize valuable buying opportunities at low levels. Below, we will detail how to determine market trends through the combination of volume and price, as well as breakthrough signals, and provide some practical operational advice.
1. Volume-price combination to glimpse tops and bottoms
1. Rising pullback to observe volume
Pullback during the upward process: When the price of a cryptocurrency shows a pullback during an upward trend, if the trading volume does not significantly decrease, it usually indicates that buyers remain active and there is still ample capital in the market to support further increases. In this case, the pullback is often temporary, and it is likely to continue rising afterward.
New highs accompanied by shrinking volume: Conversely, if the price reaches a new high but trading volume starts to shrink, this may be a warning signal indicating that buying power is weakening and sellers are starting to gain the upper hand. At this point, one should remain vigilant as this may indicate that the market is about to peak.
2. Hovering at low levels seeking buying points
Long-term low-level fluctuations: When the price remains at a low level for an extended period and there is little volatility, do not rush to buy immediately. Wait for the price to test the bottom again and rebound quickly; such reversal patterns are usually strong buy signals.
Rebound after the second bottom test: Once you see the price experience two bottom tests and then starts to rise rapidly, it is like the starting gun in a long-distance race, signaling the arrival of a new upward trend. This is an excellent entry opportunity.
2. Breakthrough signal for price fluctuations
1. Observe first before breaking through
First breakthrough requires caution: When the price makes its first upward breakthrough after a long period of bottom consolidation, this may be a sign that the market is attempting to emerge from the trough. However, the first breakthrough is not always reliable, as it may encounter selling pressure and fall back. Therefore, when the first breakthrough occurs, it is best to observe for a while to see if the market truly has the momentum for sustained upward movement.
Confirmatory breakthroughs are more credible: Only when the price successfully breaks through previous highs for the second or even third time is there more reason to believe that this marks the beginning of a genuine upward trend. It is not too late to consider increasing positions at this time.
2. Sideways volatility warning risk
Choosing a direction after sideways movement: After a strong upward movement, when the price enters a sideways consolidation phase, it may appear calm on the surface, but there is actually great uncertainty hidden beneath. In this case, the market may be preparing for a significant move next, which could either be a downward adjustment or an upward breakthrough.
Set stop-loss to prevent risks: In the face of sideways consolidation, investors should establish reasonable stop-loss points to prevent sudden price drops from causing unnecessary losses. At the same time, be prepared to seize potential opportunities, such as timely intervention when clear breakthrough signals appear.
By carefully analyzing the volume-price relationship and closely monitoring key technical indicators, investors can better understand market dynamics, allowing them to make more informed investment decisions. Remember to remain calm and patient under any market conditions, and to plan your capital management strategy wisely to move steadily in the cryptocurrency space. I hope the above sharing can help you achieve better results in your upcoming market operations!