Quality Price Forecasting and Why it is Important for any Cryptocurrency Investment - 2/2
Price forecasting is a really important topic that is common in the world of cryptocurrency. As far as cryptocurrency investment is concerned, price forecasting is something that will always be done as as to make the best investment decision in order to maximize profits. In cryptocurrency, price forecasting is simply the act of predicting the future price of a cryptocurrency. In other words, price forecasting is when a cryptocurrency investor or cryptocurrency trader of tries to correctly predict what the future price of a cryptocurrency would be. In my previous post, i wrote about the 3 main methods of price forecasting in the crypto space. In this post, i will be focusing more on how to do price forecasting using various available free tools.
The cryptocurrency I will be using to demonstrate how to do price forecasting is the Binance Coin BNB. The tools that are great for technical analysis are coinmarketcap or coingecko and tradingview or any other charting tool. On the tradingview platform, I like to make use of technical indicators for price forecasting. A combination of multiple technical indicators is a great strategy for ensuring quality price forecast. Technical analysis tools like RSI, moving average, MACD, Volume, Aroon indicator are great and also using the correct combination of technical indicators is an effective strategy when it comes to predicting the next direction the price of the cryptocurrency will move to. This can be applied on any cryptocurrency price chart.
For instance, before investing in a cryptocurrency asset, an investor can make use of technical analysis to forecast the future price direction of the asset. Using the BNB/USDT chart on tradingview, a combination RSI, MACD and moving average indicators can help in predicting the direction the price would go. This strategy in this post is great for investors who buy and hold, rather than day traders or scalpers.
For the RSI, an investor can look at the direction and position of the RSI line to know if the market is in an overbought or oversold zone so as to make proper judgment of future price direction. If the RSI value for BNB/USDT is in the oversold zone, the investor can also make use of other technical indicators like MACD and moving average for confirmation before buying the selected cryptocurrency asset. This can be a good time to buy at a discounted price especially if it is a strong cryptocurrency with great potential to the upside in the future.
Also, looking out for support and resistance levels is great to know the best time to buy. When there is a strong support level set, it can be a good time to buy because it means that the price would most likely move to the upside depending on the cryptocurrency and if the cryptocurrency is below its all time high price. When I look at the weekly or monthly chart, I pay attention to the support and resistance and possibly breakouts or resistance rejected or support becomes resistance as this will help me determine where next the price of the cryptocurrency could go.
Price forecasting can be effective when the right analysis method is used when making investment or trading decisions. Fundamental analysis, technical analysis and sentimental analysis price forecasting methods all have their benefits depending on the situation and various factors. As an investor, it is important to know when to use which price forecasting method so as to get the best result and make the most profit from any cryptocurrency investment or trade.
