Crypto Academy Week 10 - Homework Post for Professor @stream4u; All about Price Forecasting

Hello Steemians, it's me with the username @beckie96830. This is my Homework Post for Professor @stream4u; All about Price Forecasting. In this assignment, I'd be explaining based on my understanding and a little research all I know about Price Forecasting.

Introduction to Price Forecasting

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Ordinarily, we can understand that forecasting is a way of determining the future value of something or an asset. Once is certain that this particular asset would either appreciate or depreciate in the future hence the forecast. A well-defined definition of is written as:

Forecasting is a secondary research method as variables to make well-informed predictions about the goals of economic trends.

A lot of businesses, corporations, companies, investors, foreign exchange traders use these forecasting techniques as a benchmark or basis for determining their long-term operation.

What Is Price Forecasting?

Price Forecasting about the crypto industry entails estimating present and future patterns based on historical data and other evidence. To forecast the course of the economy, the financial markets, and single shares, an analyst can use both fundamental analysis and technical metrics. Knowing how to predict prices confidently leads to a successful trading experience. This reduces the likelihood of more trading failure and increases trading success.
One time I predicted rightly for the price of a particular coin, it was successful although it went higher than my prediction and I had to sell at the rate of my prediction due to uncertainty. I profited though I felt like I would have profited more if I waited for it to rise more. Trading in the crypto market is all about price prediction and this takes months, sometimes years of preparation. I'm still in the learning process.

Discuss on why Price Forecasting is needed?

Why is Price Forecasting needed?

Foreign Exchange Traders in the Crypto market on a general note need to able to predict accurately to make money, gain an audience and probably trade again. It's not all about being able to forecast well, it also entails a detailed study of the chart concerning its internal and external environment. Simply put, the price of cryptocurrencies in the crypto market depends on the forces of the internal and external environment.

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• Internal environment: Includes; The buyer's willingness to buy, the seller's willingness to sell, the volume of trade or transaction among others.

• External environment: Includes; War, Economic crises, Election, Interest rates, Treasury Budget, State of emergency, and the most recent Global Pandemic.

In that essence Price Forecasting is needed for the following purposes;

• Price prediction serves as the primary mover of the market.
• It helps determine the prices of the various coins in the Crypto market.
• When predicting prices, the crypto trader would be careful not to set the price that would accumulate losses.
• Price Forecast is one of the risk management techniques in forex trading. Traders with appropriate risk management knowledge can minimize their risk efficiently.
• It serves as a basis for entering the market.

What Methods are best you feel for Price Prediction/Forecasting?

My preferred method for Price Prediction/Forecasting.

It's worthy to note that there are various techniques, strategies, tools in determining prices during a forecast. Due to the advancement in technology and changing times, some cryptocurrency traders think they can use software such as trend detector, indicator, trading cloud indicator, or other trend indicator software to predict price. It's all a front by the developers to enrich themselves while users try predicting and rarely forecast accurately.

All the different methods of price forecasting are categorized into three methods namely; Technical Analysis, Fundamental Analysis, and Sentimental Analysis. I'd explain the three then select my preferred method and conduct a price forecast using the technique.

Technical Analysis

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The goal of technical analysis is to predict possible changes in forex price movements by critically understanding historical market information, particularly price data. The essence is to minimize the repetition of past predictions over time. In technical analysis, current market signals are discovered by checking through past market signals. As a trader for me to easily detect these signals, I conduct regular price predictions using historical data (Backtesting) on a demo account. In doing so I discovered a few trend reversal which is most definitely going to trend for a while.

Objectives of technical analysis could include;

• To help uncover current market signals (as indicated above).
• To help find the ideal entry or exit points for a trade.
• To assist to discover trends.
• To increase the discipline and confidence of traders.
• To analyze efficiently traders trading plan.

The credibility of technical analysis is built on the concept that all market players' observable behaviors – purchasing and sales – correctly represent all essential facts about a traded security and, as a result, continuously allocate a fair value to the security.

Fundamental Analysis

Fundamental analysis is a method in use by investors to determine an asset's or company's "intrinsic worth." Their main aim is to decide if an asset or company is overpriced by looking at a variety of internal and external factors. They can then use the information to enter or leave positions strategically. Traders look at the critical aspects of the company such as management team, Balance Sheet, Liquidity, and Equity ratio. Investors consider all these aspects and invest when they realize that the investing company is performing efficiently.

Sentimental Analysis

When traders use sentimental analysis they use it to weigh (arbitrage predictor) the emotions of other traders about a particular currency pair. The different price fluctuations in the crypto market can be used to realize money or lose money and it all depends on the price prediction. For instance, a good price forecast can lead to profit on the part of the trader but when price prediction goes wrong the trader, on the other hand, loses invested funds. Traders seek ideas from popular blogs discussion groups, social media to know the bias of other traders in a particular pair. Opinions from other traders or discussion group can create volatility in the price of an asset.

Take any Crypto Asset Chart graph and explain how to do Price Forecasting? OR Take any Crypto Assets Chart graph & as per its current price tell us what will be its future price for next 1 week or 1 month? You can predict for any direction up or down but explain it properly on what basis you have predicted the price.

In this analysis, I'm going to carry out a technical analysis on Steem/USD using price action to tell the current situation of Steem and also predict the future price. This analysis will be based on a Candlestick chart and every picture used is a screenshot taking from my Tradingview mobile app.

_{Steem/USD chart: Source}

From the chart above, we have seen Steem has been in an uptrend for a long time now creating higher highs and higher lows. We have a high created at $1.45 and the price has failed to break this high. This shows weakness in the uptrend and a possible price reversal in the current trend. But as we can also see, the price is still trading above the 200 moving average which shows that the uptrend is still intact. The down move can be a little retracement for a continuation to the upside. I have talked about the overall trend of Steem. Now let's look at what is happening right now in Steem and how we can predict the future price of Steem.

_{Steem/USD chart :Source}

From the chart above, we have a head and shoulder pattern which is a trend reversal pattern. Head and shoulder are always formed when the price fails to create a new high higher than the previous high. This is a strong reversal pattern.

_{Steem/USD chart :Source}

From the chart above, Steem has broken a support level at $0.90 after forming a head and shoulders pattern. This break of support is considered a break of structure from the chart pattern. Previously price was forming a higher high and right now, we will see a lower high and lower low formation. But currently, the price is sitting at a support level at $0.60.

_{Steem/USD chart: Source}

From what we have analysed using price action technical analysis, we can see that the uptrend in steel has collapsed because of the patterns and break of support. Notice how the price has been trading down after forming the hard and shoulder pattern. We might see a retest of the broken support at $0.90 to form a resistance. Then the price will continue coming down to the support at $0.32. A good sell opportunity will be at the resistance with first take profit at nearest support @ $0.61. Stoploss should be placed few points above the resistance.

_{Steem/USD chart: Source}

We know the market is full of uncertainties, the scenario above can also happen. We can see price reject the current support it's sitting at to break the possible resistance. If this happens, a buying opportunity can be seen at $0.90 and we can see price retesting the high at $1.42. It's all a game of patience and reacting to what the market is doing. But if the price breaks this current support at $0.60, we will see the price go down further to the next support at $0.32.

Conclusion

Accurately done, either of the techniques can provide a delightful insight on price prediction in the crypto market and as a crypto trader I will advise combining the analysis to determine price.

I'm a member of team @steemalive and this is me

❤️❤️❤️❤️
Becky

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