Today is a serious red day in crypto !!
Image : coingecko.com/en
It’s a serious day in crypto with today everything in red.
I think it's a great time to buy crypto at a time like this when cryptos are having a good correction and can be purchased at a discount.
I'm a HODLer, I prefer to make a profit in bullish periods like this rather than dealing with these occasional corrections, so I'm calm. (What is HODL? HODL is a term derived from a misspelling of "hold" that refers to buy-and-hold strategies in the context of bitcoin and other cryptocurrencies. )
Using Technical Analysis and analyzing crypto price action
Bitcoin and Sub-coin Domination ( Domination : Bitcoin (BTC) dominance, or the ratio of the largest cryptocurrency's value to the overall market capitalization of digital assets)
Here's how I read crypto charts by analyzing the crypto market using basic Technical Analysis (TA).
First, it's good to check Bitcoin and Altcoin dominance. Now, BTC dominance (BTC.D) has been dropping from 60 to 52 since the end of March, and Sub cryptocurrency dominance has increased from 40 to 48.
Bitcoin Dominance Chart from www.tradingview.com
This means that Alternative crypto coins are dominating the crypto market cap with investors investing on them bringing about an ALT season which is a time when ALT coins outperform Bitcoin in price performance. ( The term "Altcoins" refers to all cryptocurrencies other than Bitcoin. "Altcoin" is a combination of the two words "alt" and "coin" and includes all alternatives to Bitcoin. )
Altcoin Dominance chart from www.tradingview.com
As an crypto investor I am looking at these charts to predict when an end to the Alt season would come in a happening bull market like this. The chart shows that in the last bull run the Alt season peaked at 63 on Jan 8, 2018, then the ALt dominance kept falling. Therefore, ALT coins still have room to grow in this bull run until it peaks to 60 dominance range. Then perhaps, the bear market phase would begin like last time.
Now, let's see some ways to analyze these various crypto price movements.
The point where exponential price rise halts due to profit booking
Any crypto price that currently experiences an exponential price increase will reach a point where the ongoing rise in price comes to a halt. This is because investors want to set aside profits. Therefore, as investors, we must understand that after a serious rise, prices will drop at some point.
Now, such price exhaustion points can be seen on various crypto price charts. The point where the wick of a crypto price candle goes too long means that the price for that crypto cannot rise any further. This point marks a good point to record profits.
Check out this chart below -
Notice the sell off that happens after DOT tops out at the price of 47 $.
A strategy to sell at a high price and buy back after a good price correction.
What you can do right now is book profit selling some of your cryptocurrencies and waiting for a correction to get those cryptocurrencies back at a discounted price. It takes patience because it may take time for the price to fall well, until then the price may go sideways.
It is also worth noting the volumes, as volumes drop after a good price stage, indicating that the current bull run is over.
Buy the Dips
Now, at what price should one buy back the sold coins? . That price depends on the support levels of the crypto price. For ex- Dot’s support level here was 31, beyond this whenever the price of DOT has fallen down, it’s been brought up.
The elongated red wick of the price candle which has been circled signifies that price has bounced up again, as DOT was immediately bought up at that price.
During a bull market like one we are in, it's good to buy back cryptos at dips. Generally, whenever a crypto falls beyond its 50 Exponential Moving Average (EMA), one can buy the dip as has been happening with DOT crypto.
THeta Price Analysis chart - check the dip, price below 50 EMA and RSI is over brought
50 EMA Dip buys are good when one is inside a bull market
However, please note, this scenario of buying dips whenever price falls below 50 EMA is applicable only when we are in a bull market, like now. If we go into a bear market price may fall down below the crypto’s 200 EMA itself, that is why we must get out in time. An easy way to do this is keep booking some profits at price tops, so that we keep getting profits on our investments.
Also make note of the RSI, now DOT looks quite heavily oversold after a price decline.
When Resistance is broken to the upside - The sky is high (:
One can also note that after the price of DOT has broken a resistance level, the price has risen further till it touched another resistance level that newly gets established. This year Alt coins have been reaching new price level highs, making price discoveries just like DOT has been doing here.
When a resistance level is broken, that resistance level turns into support. This can be seen in many instances in DOT where it’s price finds support at it’s previous resistance level.
Well, let’s recap
There is definitely going to be a price Top, a limit where upward price movementum halts, that’s the point where people sell off and book profits.
Decred Crypto price Analysis
Price will stabilise at a bottom which can be at earlier support price ranges. Remember previous resistance becomes support.
One can sell cryptos at the top and buy back after it experiences a good correction.
Well, hope you enjoyed this article.
