Blockchain and Cryptocurrency Intermediate - About Market Structure

In the world of cryptocurrency markets, market structure is one of those terms that come up a lot due to its importance in the market and as such forms one of the core basis when it comes to cryptocurrency trading. A market structure is basically how people take advantage of the market or how the market moves. It is simply seen as the pattern of the price actions taken by the market to move from a particular price point to another price point. The market always moves in patterns, it moves in a wave pattern, in high-highs and high-lows, lower-highs and lower-lows, and sideways.

The market creates impulses and also creates corrections. In the market, during an uptrend movement, the market creates higher-highs and during a downtrend, the market creates lower-lows. To demonstrate how this is seen in the market and how people take advantage of the market, when the market is in an uptrend and creating higher-highs, liquidity decreases and people start selling to take profit because they have incurred a lot of profits and they think that the price is high, this selling pressure turns the market into a correction that sees the market move in a downtrend and this cycle or structure repeats.

Uptrend market structure

In the uptrend market structure, the market moves in a wave-like pattern and is seen to create higher-highs and higher-lows. The trend will continue to rise in that direction until it begins to show signs of weakness when the market does not create a higher-high, and sees the market create lower-low. To demonstrate this uptrend market structure, I will be using the Binance Coin, BNB/USDT chart to show the wave-like pattern formed in the uptrend movement, creating higher-highs and higher-lows.

BNB/USDT Chart

Downtrend market structure

In the downtrend market structure, the market also moves in a wave-like pattern and is seen to create lower-lows and lower-highs. The trend will continue to fall and create lower-highs in that direction. The trend ends when the marker reverses and begins to create higher-highs or equal lows which is a sideways movement. To demonstrate this downtrend market structure, I will be using the ETH/USDT chart to show the wave-like pattern formed in the downtrend movement, creating lower-highs and lower-lows.

ETH/USDT Chart