CRYPTO ACADEMY WEEK 10-HOMEWORK POST FOR [@stream4u]|| All About Price Forecasting||24-04-2021

source

Hello friends and well.Welcome to another week in the Steemit cryptoacademy lecture series.I thank Professor @stream4u for the enlightenment.

QUESTION ONE
Most times we listen or read reports on weather forecast to know the chances of rainfall so that we could plan our day.In the same vain,we like to forecast the price of other commodities or things that we invest in.Forecasting will help us to know whether the price will rise or fall.

PRICE FORECASTING
Price forecasting is simply the process of predicting the price of a commodity,goods or service by evaluating key factors such as demand, availability,market trends etc.

In the crypto world,price forecasting is a means of predicting the future price of a cryptocurrency inorder to know whether to buy,sell or hold at the moment.This process involves analysis of the market trends,supply, awareness about the cryptocurrency etc.For instance if I am a dealer of Bitcoin,price forecasting will help me to know when the price of Bitcoin will rise or fall by so doing I can maximize profit on my Bitcoin.

IMPORTANT OF PRICE FORECASTING
•It helps to anticipate change in the market.

•It helps to make proper budget.

•It helps to set realistic goals.

•It helps to reduce loss.

QUESTION TWO
If two drivers Mr A and Mr B are heading for a 5km journey and Mr A has 50litres of fuel in his tank but does not know the right direction,he will likely waste the whole 50 litres without arriving at his destination.On the other hand,Mr B has only 25litres of fuel and knows the direction,he will get to his destination even though he has only half of the fuel possess by Mr A.

The above illustration shows why price forecasting is needed to survive in the cryto industry.
Price forecasting will help the trader to know when to sell his cryptocurrency and make a good profit.For example,if a trader senses that price is heading towards a dip after a bull run,the trader will have to sell off and make profit before the dip commences.

Price forecasting will also tell a trader when to hold on his cryptocurrency without selling at the wrong time.For example if the price of crypto falls back to the position where it was before the bull run,the trader will have to hold on to his crypto because the next thing will likely be an increase in price.

Price forescasting also helps a buyer to buy at the right time,hold on,and sell at the right time.The need for price forescasting cannot be over-emphasized because it is a necessary tool towards ensuring success in the cryptocurreny market.

QUESTIONS THREE
There are basically three methods of price forecasting:
•Technical Analysis

•Fundamental Analysis

•Sentimental Analysissource

TECHNICAL ANALYSIS
This is one of the methods of Price forecasting.This method relies on predicting the future price of a cryptocurrency based on the price history of the Cryptocurrency under review.It believed that past prices can influence the future price.For example the price chart for Bitcoin represents how the price has fared in the past few hours,days,weeks,months or even years and so the technical traders can use the past price,supply,trends etc to know when to buy or sell.

Price of Bitcoin in Naira over the last 24 hours

FUNDAMENTAL ANALYSIS
This method of price forecasting analysis centres on paying attention to other factors that could have effect on the price of the Cryptocurrency.These factors could include;the whitepaper of the cryptocurrency,the purpose or utility of the cryptocurrency,financial strength of the cryto board team and the future of the cryptocurrency.
Other factors may include interest rate,transfer charge,ease of buying the cryptocurrency,government policies, inflation.

SENTIMENTAL ANALYSIS
This is the third method.It is not as effective as the first two methods.This method involves forecasting the price of a cryptocurrency by listening to news houses,magazine/newspaper
predictions,market leaders, uninformed trades.

As for me.I think Technical and Fundamental Analysis are the best methods to rely on in price forescasting.

QUESTION FOUR
I will chose Bitcoin as a case study and I am drawing my analysis from the chart below.

source

From the chart above,the price of Bitcoin started at around $6,000 in January and it continued to rise and got up to $10,000 by February.A trader can decide to sell his crypto to make profit around this period.

However,by March the price started to fall,it continued to fall until it got to around $5000 by middle of March.At this point,the price has fallen below the initial price where it started to rise in January ($6000).It is never advisable to buy at this point because the dip has gone below the take off point in January.

Again,by May/June the price moved up to the $6000 which was the take off point in January.This is the best time to buy the cryptocurrency.The correction has peaked and the price is destined to move higher since it has returned to it's initial take off price.

After the correction,the price continued to move higher and higher June and continued to make the bull run.The trader that bought the cryptocurrency in June has continued to enjoy a great profit.
LAST LINE
My analysis from the BITCOIN chart suggest/predicts that the best time to buy is May/June( when the price got to the starting point of January) so that the trader will make profit as the price continued to rise after the May/June period.

In a nutshell,if the price of a crypto rises and then falls below the start up point,then it is not advisable to buy at that time.

Wait until,the price gets to the start up point, then it is best time to buy.

CONCLUSION
Price forecasting is a process of making good decision in the cryptocurreny market by predicting the price so as to know when to buy,store or sell to make profit and reduce the chances of running into loss.