Crypto Academy Week 10 - Homework Post for [Professor @stream4u] Homework post by @ebiis

1. What Is Price Forecasting?

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Price forecasting is the use fundamental/background information, technical analysis and sentimental news to predict where next the price of an assert will be.

Everyday we practice price prediction intentionally or unintentionally, from trying to know if transport fares will increase during the rush hour of the day, to predicting the next move of bitcoin based on its last dip.

In the crypto market, price prediction is a method where the next move of crypto coins are tried to gotten form using high tech artificial intelligence for price analysis, to social media and news sentimental analysis of each coin and detailed fundamental research on crypto companies team, and their project.

Price prediction which can also be done individually by doing your technical analysis and also researching on the coins then adding them to your watchlist, all to try determine the next move and best times to trade these coins.

2. Discuss on why Price Forecasting is needed?

Here I will be using the story behind the Japanese candle stick invention.

In ancient days with Asian countries having a booming market, it was noticed that the price of rice fluctuated during the day from a starting price (open price), to a daily high, then a daily high, then a daily low depending on how profitable trades were at that day, then lastly the day’s close price.

The Japanese were able to create the Japanese candle stick picture below:

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With this simple trading tool, Japanese traders knew that definitely the price of rice was going to either get higher during good days than its opening price, or lower during bad days.

On understanding this, when demand for rice was in season, a trader could quickly buy some rice very early in the day(days open) and sell at a higher price at the peak of the days trade, making some profit. This very simple price prediction technique was lucrative business and made profits for smart traders way back before the stock market.

From this story I have been able to tell that price prediction is needed for making profit in business.

3. What Methods are best you feel for Price Prediction/Forecasting.

Coming from a Data Science Background, although all techniques (Technical, Fundamental and Sentimental analysis) are needed in varying degree for price prediction, I will say Technical analysis gives a better pointer, as it is said “it is all in the chart”.
Technical analysis follows trend and patterns which usually tell how well a crypto currency is doing and how accepted it is in the society/market.

Technical analysis which shows us real-time price movement, this telling us the pattern price is following. We can then make these patterns less noisy by using moving averages technical indicators, pic below:

We can also check for the momentum of price by using the stochastic oscillator to tell when price is moving heavily in a direction, or when price has over bought or over sold. Pic below:

Technical analysis also includes the volume of trade, change in volume which may signify change in trend. Pic below:

Then lastly we can use the candle stick patterns and price action to tell what price may be signifying.

With all these we can see technical analysis furnishes us with great ammunition to tell how price is doing and its next expected move/trend.

Supporting technical analysis with your research on fundamental analysis and keeping tabs with news and social media for some sentimental move all add up as 3 pillars of good price prediction.

4. Take any Crypto Asset Chart graph and explain how to do Price Forecasting?
To set up my trading/price forecasting view for the BTC/USD:

First I add the currency pair usually using my MT4 app.

Then I add my moving average indicators.

The moving average indicators give us a smoother pattern behind price, telling us the incumbent trend and how smooth or the trendiness of the trend.
I add my moving average 10, 20 and 200 for short medium and long term trends. Setting them to close and simple.

I then add my stochastic indicator. The stochastic oscillator is a momentum indicator, it tells you when price is pulsating towards a direction, and also when the force pushing price in that direction may start dwindling. Pic below:

Lastly I add my fractal indicator: This shows me when price is showing signs of dipping or pumping pic below

Note:
I take technical analysis on great coins as they involve less noise and volatility. small capital coins can see great volatility due to fundamental causes which sometimes do not respect technical analysis.
I also keep tabs of my sentimental analysis through social media and news to know when there is a move in the market.

Conclusion:

As the world becomes a global market, one should have great knowledge of price forecasting to be in front of any market trend.

CC
@stream4u
@steemcurator02