THE OVERBOUGHT AND OVERSOLD REGION IN CRYPTOCURRENCY MARKET TRADING

Hello to everyone in this wonderful community and in this great platform today. I greet you all in good health and I want to believe that you all are doing just well this day. If so, we give God the praise for the sustenance of life and good health.

Today as marking the beginning of the week and be it Sunday, I believe we all are having a good time with family and friends. Also I believe most people will be home today especially cryptocurrency market traders who are constantly making trades in the cryptocurrency market.

I bring you all an important topic today regarding trading in the cryptocurrency market and hence this topic will help to understand about certain scenarios in the cryptocurrency market trading. Today I have titled the discussion for today as THE OVERBOUGHT AND OVERSOLD REGION IN CRYPTOCURRENCY MARKET TRADING. I urge you all to stay put and enjoy the ride as we begin the discussion for the day.

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In a normal trading setup, we do notice that a given asset is being appreciated by certain individuals in a particular market trading and hence that will foster the said asset price to gain increase in value.

Source

We get to see that an asset is been highly purchased by a given individuals hence the price as at that particular time will rise drastically at that particular point in that and such market. As the demand for such asset increases in same way does the price increases too for it works hand in hand.

The cryptocurrency market trading is not an exceptional and the only difference is that in cryptocurrency the asset we are talking about is digital while the asset we are talking about in a normal market trading is a conventional asset. These are asset we cam feel and touch but the digital asset are asset that we can not feel but can see it in values.

Now having gotten to understand the above information, let us immediately head back to the discussion of the day.

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OVERBOUGHT REGION IN TRADING

In cryptocurrency, just as I have explained earlier there is a particular point in time where traders executes a buy trade and this trade is seen in high volume in the cryptocurrency market. The point at which an asset price depicts a higher high is know as the Overbought region.

Here the activities of the traders purchasing the said asset is seen as the chart depicts a higher high in price. Mind you, the overbought region can not be seen with the aid of the chart alone and that is why it is advisable to make a good fundamental analysis if you want to see the activities of the traders in the market more clearly before executing your trade entry in the cryptocurrency market trading.

The overbought region is clearly depicted and can be seen with the aid of the RSI indicator. The RSI indicator is said to be the indicator that shows the price value of the asset when it is in a particular area or region as the case may be and the RSI indicator has values which helps traders to know if an asset is in particular region at a particular point in time.

With the RIS indicator as seen above, we noticed that price has been in the overbought region and when that is seen it means that traders has purchase a given asset in the market to a level which is has been overbought and when that happens it indicates that sooner or later there is every tendency that the price will drop down as it has cross a given line hence there would be a fall in price in no distant time.

With this understanding most traders that are yet to execute their trade after much consideration in the market through performing a fundamental analysis, they will immediately execute a sell trade because they understand how the cryptocurrency market trading works.

When an asset has been overbought in the cryptocurrency market, the next thing that is like to occur in the market is a fall in value regarding that asset by the traders that have purchased the asset initially before the price went up to an overbought region.

It can also be as a result of other traders who are just coming into the market to execute a sell trade entry in other to make profit since the asset has been overbought already and they believe the next the that is likely to happen is a fall in price value of the said asset.

THE OVERSOLD REGION TRADING

The cryptocurrency market oversold region is the inverse of the the overbought region. In the oversold region we get to see that the price value of an asset has been oversold in the cryptocurrency market trading at a particular point in time. Here the RSI which is the relative index indicator reveals to us the price value of the asset in the oversold region.

This implies that an asset has been sold off excessively by certain traders in the cryptocurrency market at a given point in time and hence this is as a result of the activities of traders in the market that have sold off their assets. In this scenario other traders can take advantage of this situation by purchasing the asset at the oversold region and this is for the purpose of making profit when the asset eventually is bought in the cryptocurrency market.

The RSI helps us to picture our the asset price value of a particular digital currency and as such it depicts vividly what the price is as we get to see the price value at a particular line when it has been added in the chart when making fundamental analysis of a particular asset in the market.

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CONCLUSION

The overbought region reveals to us that an asset has been excessively purchased at a particular region and in a given point in time and traders take advantage of this to execute a sell to in other to make profit while the oversold region is a particular region where an asset is been oversold in the market and as such most traders executes a buy entry to purchase the said asset at a low value so as to make profit when it eventually rises.

Thank you all for having me this morning and I look forward to discussing more with you all when next I am here and bye for now.