Crypto Academy Season 2 Week 2 Homework Post For Prof @stream4u | Price Forecasting by @sadiqxylo

Hello Everyone,

I am honored to participate in this homework Task by prof @stream4u on Price Forecasting. The detailed lesson was very comprehensive.

PRICE FORECASTING

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What is Price Forecasting?

The term price forecasting contains two different words, that is, Price and Forecasting. I will first explain what price is.
Price is an amount that is needed to be paid in order to own an asset. The asset is been tag with a certain amount before it can be purchase.

Forecasting also referred to estimating not exact but possibly what is to happen in the next hour minutes or even years. In simple terms you are predicting what the future holds.

Now when we combine the two different words we have Price Forecasting, which can be explain as an estimation in the price value of an asset. It can be that the price value will rise or even fall.
We can’t just sit and start to do price forecasting, it needs to be done base on certain analysis, and these analyses are; technical, fundamental and sentimental. I will explain this three term.

• When we talk of technical analysis, investor needs to study market trend, chart pattern, price movement and market support.

• Fundamental analysis involve the performance of the asset company, the technology type used by the company.

• In sentimental analysis the investor simply looks at the rise and fall of the asset, the rate at which the asset is been purchase and predict the future of the asset.

These analyses are very useful when trading a cryptocurrency because it helps traders to make right decisions when investing.

Why is Price Forecasting Needed?

In the crypto world a good investor won’t push money into an asset and sit back to yield more profit but rather good investors use price forecasting to control asset growth. There a lot of reason why investors need price forecasting and below explain the benefits of price forecasting.

• Price Forecasting help investors to gain high profit: price forecasting help investors to acquire huge profits in the sense that, traders determine when to sell and acquire profit and it to buy at low price at resistance state.

• It helps investors to prevent poor investment: when investors do price forecasting, they sort out profitable and non-profitable assets, so as to know which one to invest into prevent losses.

• Price forecasting prepares business and firms for an unexpected change within the market. Having in mind what the future holes and not just the current data analysis of an asset can aid traders to adjust their strategies to their own benefit.

• The fundamental analysis help us to learn more about asset companies and sometime these companies produces different assets that are worth investing.

What are the best methods for Price forecasting?

I have talked little on these methods in my introduction and I will like to detail it now.

• Technical Analysis: in this type of analysis, investors consider the following guidelines, chart trend, bearish bullish pattern, market support, movement of price. Technical analysis help investors to forecast price change by using the historical information. The chart trend in this method is used to determine the future price of an asset. This method is very difficult and needs much time as well. Among all the three methods, I regard this as the best since risk is minimal.

• Fundamental Analysis: this method does not look in to the price of the underlying asset but rather the effort of the asset company. Investors take into consideration the performance of asset company team. Also investors check to know the number of successful assets the company has produce in the crypto market. The whitepaper is also check in order to prevent scam.

• Sentimental Analysis: In this method traders concentrate on television, social media, comments or even articles and many other platforms on the performance of the underlying asset. Investors who own this asset will publicly announce that the asset is expected to rise. This method is very risky and I wouldn’t advice traders to practice it.

Take any Crypto asset chart graph and explain how to do price forecasting? Or take any crypto asset chat graph and as per its current price tell us what will be its future price for next 1 week or month? You can predict for any direction up or down but explain it properly on what basis you have predicted the price.

To make this very comprehensible, I will first explain the terms as use in price forecasting charts graphs.

• Resistance level: this simple means an upward point on a price chart graph at which a particular asset price begins to fall. When market price of an asset is coming near this point, a trader can decides to sell the asset and make a profit than to hold which can lead to risk when drop.

• Support level: this indicates the downward point on a price chart graph in which an asset price begins to rise again. When the an asset price begins to rise after declining to a particular point then the support level has been achieved.

From the graph below, I have indicated some marks regarding major resistance , minor resistance, major support and minor support.

Considering the chart below, it represents an Ethereum chart graph from 2015 to 2021. From August 2015 to early February 2017 indicates from the graph chart that the price of Ethereum was stable and risen up in the middle of February 2017. From the graph Ethereum reaches a minor resistance level in November 2017 and declined again in February 2018. It maintains this declination during this year and and attained a major support level in November 2018. Ethereum uses two years to attain a major resistance level, that is from 2018 to April 2021, which currently sticks to this.

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Looking at the chart graph above, Ethereum has experienced rapid rise from 2018 to 2021, which means ancestors should be expecting a little decline in the price of Ethereum witching the next three months.

CONCLUSION

It is vey important to know price forecasting when investing in crypto assets, and investors should make their own research before involving into market trade. Among the three types of price forecasting I will advice we keep onto fundamental and technical only since sentimental is very risky.

Thanks For Your Attention