Technical analysts in the financial markets worship market trends. They always remind themselves of one saying: Trend is your friend. This shows that market trends are extremely important in investing #Bitcoin2024 .
So do you know how to identify market trends?
1. What are the market trends?
Bitcoin market trend is temporarily understood as the trend of Bitcoin price moving in a certain period of time. Market trends are often analyzed over long-term, short-term and medium-term time periods.
2. How many types of trends are there?
The market has 3 main trends:
Uptrend
Sideways trend (Sideway)
Downtrend
There is a classic question in the market that I have come across or been asked many times, especially when the market fluctuates strongly. That is the question: What is the upcoming Bitcoin trend like? or for example: Will the up-down trend continue?
This is not a difficult question, and now I will help you identify market trends!
2.1. Uptrend – Uptrend
In an uptrend, no matter what time frame you watch, it must ensure the following factors:
The next peak is higher than the previous peak
The following bottom is higher than the previous bottom.
The next bottom must always be higher or in some cases the next bottom is equal to the previous bottom, but absolutely cannot be lower than the previous bottom. If the next bottom breaks and goes lower than the previous bottom, we need to consider and review trends.
2.2. Downtrend – Downtrend
In a downtrend it's the opposite:
The next peak is always lower than the previous peak
The following bottom is always lower than the previous bottom
In some cases, the price chart creates waves with two equal peaks but the next bottom is still lower, it cannot be considered a trend reversal. Only when the price chart has a higher peak than the previous peak is it called a trend reversal. At this time, the price chart will try to create another bottom higher than the previous bottom to reverse the trend
2.3. Sideways trend – Sideway
In a sideways trend, the price chart only moves within a certain range. The tops and bottoms are not clear and in some cases the next top and bottom are continuously lower than the previous top and bottom, forming a pattern called a Pennant.
Sideways trends are the most annoying trends for traders or can also be an opportunity for professional traders. Because in a sideways trend, price only moves within a certain range, not bringing a large profit margin to traders. But for some margin traders, the side way is their hunting time. Continuously, intraday trading opportunities are created. The resistance - support points during this period also became quite solid, helping them have great entry points. But this is also the period when candlesticks appear a lot, sweeping their stops, so it can be an opportunity or it can also be a knife that kills traders' accounts.
Let's go to the chart of LINK/USDT to see an example of an uptrend.
And just now I just guided you on how to determine market trends according to candlestick structure.
In addition, there are many other ways to determine the trend, for example, determining the trend with a moving average (MA), or can also be determined with the MACD indicator,... about this part, in specialized articles. For each indicator, I will guide you in more depth. But no matter what, determining market trends using candlestick structure is still the most effective and fastest.
