How to Read Market Structures in Crypto Using Wyckoff Theory, Elliot Wave Analysis, and Other Advanced Tools
The most significant ability that any trader should possess is the ability to understand the crypto market movement. The market can appear to be chaotic, but with proper instruments, you can observe definite trends which will provide insights into the direction in which the prices will move. The Wyckoff Theory, Elliot Wave Analysis, and some other sophisticated measures, which assist you to interpret the market structures effectively, are some of the most helpful tools to this.
The Wyckoff Theory is a relatively oldest and one of the most esteemed ways of analyzing the movement of big players or the smart money in the market. This theory describes that all markets pass through four principal phases accumulation, markup, distribution and markdown. During the accumulation phase, smart money secretly invests in assets when the prices are low.
This is followed by the markup stage where prices increase with the increased entry of traders. The next stage is the distribution stage where the intelligent money is sold to masses at high prices. Lastly, the mark down stage commences when the prices are on the decline. As soon as I became aware of how to identify these trading points on the crypto chart, I could know when to make a purchase and when to wait.
The other best approach is the Elliot Wave Analysis that deals with human psychology within the market. According to this theory, the prices follow repetitive cycles over time. The main trend and the correction contain five and three waves respectively.
As an example, the wave patterns can be observed frequently when market participants become emotionally sensitive to the price change when Bitcoin is on the rise. The knowledge of such waves aids the traders to be aware of when a movement is nearly complete or when a new one may commence.
Other sophisticated tools besides these two can also be used to ascertain market structure. The Elliot Waves are commonly combined with Fibonacci retracement to identify the points that the price can possibly take a breather. Volume analysis assists in demonstrating whether a movement is powerful or feeble. No one knows when the price will stall or turn and support and resistance zones inform you of this.
Finally, the process of reading the market in crypto is not about speculation, but about identifying tendencies that go around. Wyckoff Theory, Elliot Wave Analysis and other tools allow anyone to learn about the movement of prices and to make superior trading decisions. Being a trader of Nigerian nation, I become sure that these tools provide me with the clear understanding of what is indeed going on behind the charts.
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