CRYPTO ACADEMY WEEK10-HOMEWORK POST FOR @stream4u//ALL ABOUT PRICE FORECASTING//DONE BY @kelvincole

Hello Everyone, good to be back on this platform. Special kudos to @stream4u for his educative and informative lecture. Find below my answers to the homework given

Price Forecasting has to do with predicting the future value of a commodity, asset,product and even services by evaluating/assessing several components like: the demand for the product, its present value, the market trend,the company structure,the managerial setup,its past and present performance as well as the price movement and how it will affect the short term and long term investment of the company, entity,blockchain.

Price Forecasting also mean evaluating or foretelling what the price of a particular Crypto asset, product or commodity will be in the future by taking into cognizance its present value,demand,the present structure of the organization as well as the technical, fundamental and sentimental derivatives of the product or asset.

Through Price Forecasting,investors in Cryptocurrency are to a large extent able to predict the future price of their assets and know when its safe to Buy/invest or sell, all depending on whether the particular investor is a high, moderate or conservative risk taker.

REASONS FOR PRICE FORECASTING

1. The Volatility/unpredictability of the Market calls for proper price forecasting before deciding whether to invest small or big
2. Price Forecasting helps to determine when it is safe to invest
3. Price Forecasting enables an individual/investor to know when to come in with his investment as well as when to leave, rather than waiting endlessly and blindly for huge return on investment that may not be the case sometimes.
4. Through proper Price Forecasting, the investor is well informed of when to increase his investment to get a higher return, or when to sell to avoid huge loss
5. Price Forecasting also puts the investor at liberty to decide whether his investment is going for a short or long term basis.
6. Price Forecasting well executed helps investor to invest in multiple trade that will increase his profit during a specific market trend,rather than investing on a single trade and waiting for the duration of that specific market trend to elapse.
7. Price Forecasting enables the investor to look beyond just the current market and price trend and volatility of the asset, to the company's managerial setup in terms of performance,its market supply, how they implement new products as well as their weekly to monthly balance sheet.

BEST METHODS FOR PRICE FORECASTING

The THREE Methods listed below are very ideal and important for Effective Price Forecasting:

Technical Method:This method allows the technical analyst the opportunity to predict the price movement, identify the market trend,its bearish and bullish trend,as well as its resistance and support of a Crpto asset .
The Technical analyst also examine the past statistics of a particular Cryptocurrency,including factors like its volume and movement. Here, the analyst starts by identifying the trend,followed by reviewing any major support and resistance level that may militate against or hinder the trend,search for chart patterns and finally,set up with high probability.
Technically analyzing Cryptocurrency, the Technical analyst indulges past market data to project or determine future price movement. The technical analyst with the past data generated, can come to an educative guess or assumption to whether a particular digital asset price will go up or decline in the future.

Fundamental Method:In the Fundamental Method, the analyst or investor does a comprehensive analysis on the available data/information about a Financial asset or Crpto asset, how it is used, the integrity of the team behind the project,how they introduce new product to the market, their performance stride etc, to ascertain whether the asset is overvalued or undervalued.
In other words, the investor or trader is not concern or places less emphases on the Market trend,the prevailing market price or movement, the support and resistance level etc, but rather, attention is placed on closer look on the company's reputation in terms of their managerial set up,how they operate,their performance indices, their profitability status,how they implement a new product, the demand and supply of their product etc, and all these factors put into consideration determines whether they will invest in the asset or not.
The Fundamental analyst takes into consideration the management team effectiveness as well as the quantitative, qualitative and the external and internal factors or components of the Crypto asset. They place emphasis on an asset real value to determine whether the asset is overvalued,undervalued or fairly valued, and not the market price that they made deem to be inaccurate.
The Fundamental Analyst takes into consideration:
A) The companies share price
B) Their price to earning ratio
C) Balance sheet
D) Earnings per share
f) Managerial setup .

In the Cryptocurrency market for example, the Fundamental Analyst examines the Cryptocurrency sector,its global and domestic environment, its demand and supply trend, as well as its competitive landscape.

Sentimental Method:This method of Price Forecasting is a situation whereby an investment analyst base his forecast on mostly social/print media. They observe the volatility in the markets and analyze the market trend to know if it will be positive, negative or neutral through publications on print media,discussions in forums, as well as broadcast in news and media houses.
The Sentimental analyst tends to buy when sentiments are high and sell when sentiments are low because they take into cognizance the opinions,attitude and emotions of a group think, expressed mainly in social platforms in respect to the prevailing market trend or volatility.
The Sentimental Method is born out of feelings or emotions that investors or traders manifest in respect to the price activity of a particular Crypto asset. These sentiments may have be necessitated out of several factors like information gotten from both the fundamental and technical analysis indicators.
The sentimental analyst uses an instrument that shows or portrays customer disposition towards a particular brand or asset. Their mechanism is able to automatically discover the tone,emotions and pressure in any online discussion or deliberations thereby designating them with either positive, negative or neutral tag.

Using the TECHNICAL ANALYSIS/METHOD to explain the price forecast for the Cypto asset chart graph below, its important to re-emphasize that this method entails using real world data to predict or forecast the future of the market with emphasis on how buying and selling is influenced by the lowest level a stock gets to overtime, which is the SUPPORT, and the highest level the stock gets to overtime which is RESISTANCE.

From the graph, Resistance is high, which means the price is higher than the current market price, and as such, there tend to be more sellers/supply.The increase in supply at this level , accompanied with the absorbing and consolidating of the supply, will create a likelihood of price decline.
It is important to note here, that at this Resistance level, there is every possibility of excess supply or sales which invariably in the long run generate pressure in supply, and such pressure will inadvertently bring about price decline.

This second graph, clearly shows the lowest level the stock price has reached within a period of 1 to 4 hours ,which will propel the investor to buy knowing fully well that the price will go up in the future.
At the support level, the trader anticipate maximum demand or purchase of share, because the price here is lower than the current market price and it is almost impossible for price to fall below the Support level, hence, as a result of the consolidated demand, its creates a demand pressure in the market which predictably will lead to a rise in price in the future

Many thanks for the opportunity to participate in this lecture. Kind regards @steam4u