In this educational post we will discuss how to find an altcoin bottom and uptrend.
Highs and lows are nothing new in the cryptocurrency market. In fact, highs and lows have become so common in the market that they have become an inherent characteristic of the market. As goes the characteristic of the market, it is also natural that participants give in to their emotions during them.
Many people sell when their assets are low and end up regretting it later. Most coins that go drastically down, also see significant highs in the near future. But because of the fear of a downward trend, people end up selling and lose out on the opportunity to see some gains from their investments.
A fact that all cryptocurrency owners and traders have to make peace with is the fact that the market is unpredictable. And that highs and lows are a part of cryptocurrency life and just because an asset is on a downward trend, doesn’t make it worthless in the future.
But, the volatility and unpredictability of a market can be predicted. Forecasts can be made about what is likely to happen in the market with historical information, current information and coin characteristics. The process of forecasting or predicting a trend of a particular asset is called technical analysis. Technical analysis in terms of market highs and lows predicts when and how the market will fall or rise and also help narrow down a particular time when the market’s downward trend pattern will be broken.
These are the following tells of the cryptocurrency market when one of its digital assets is about to break its downward trend pattern and start to see some gains.
An Uptrend
This is probably the biggest tell of the cryptocurrency market. When the value of an asset has been consistently on a downward trend and the trend sees a spike in value followed by a couple of other ones in a significant time frame, it means that the low trend is finishing and the coin is reversing its trend.
The small uptrends and spikes are usually a promising sign that the digital asset is on its way back up in terms of trends and values. And is also the time that most traders buy into the asset, because it is going up in value and at the same time is at a low rate perfect for buy-ins.
Good Read: Top 10 Altcoins to buy in February
Volume Spikes
A very good indication that a downward trend is about to break itself is when the volume of an asset spikes. During large falls in the value of an asset, the volume of trades and people using it starts to taper. This is because of the fear that the asset will not recover.
But when an asset with a downward trend starts to see spikes in its volume again, it is usually an indication that some short-term highs have been reached and the asset is about to start climbing up the value ladder again. Keeping an eye out for volume is a good way to determine when an asset is breaking its downward pattern.
Mathematical Calculations and Factors
The noticing of an uptrend and increase in volume are mere speculatory considerations for the ending of a downward trend. It is not a definable or justifiable reason to assume that a trend is going to reverse itself. And as is the case with most traders and technical analysts in the market and community, numbers speak the truth.
So many traders employ mathematical means and averages to find out whether the pattern of a downward trend is actually about to break and reverse itself or not. The most commonly used mathematical ways are the calculation of moving averages and graphical analysis. There are many oscillators too that can be employed to forecast which way a trend’s momentum is about to go.
Our Take
Not all altcoins have a future that will change yours. But that doesn’t mean that they are not worthwhile investments. Just because of a long drawn downward trend, it is not justified to sell unless there is no hope of a revival of the asset. This is the case with most altcoins in the cryptocurrency market as of now and is also the case with Bitcoin itself.
Before selling your assets or deciding to buy new ones, make sure that you are aware of the possibilities and make sure that you know whether this is a trend that the asset in question can reverse and survive.
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