There is a lot of chatter going around the world about how to interpret the bullish and bearish charts of the bitcoin marketplace. While this virtual currency has been traded for decades, it is still very much a work in progress as far as technical analysis is concerned. As such, it is important to understand that these charts will always have a predominant tendency to either be bullish or bearish. They cannot be taken at face value blindly because of the fact that the market for this kind of currency is rather unsteady due to the various governments and institutions that may attempt to intervene in the process.
However, by learning how to interpret the market data, you can come to see that there are certain indicators that can be used to identify the oversold conditions in which the marketplace has been found to be in. By studying the various bull markets and the movements that they have gone through, you will have a pretty good idea as to what is likely to happen with the bitcoin marketplace going forward. Bear in mind, too, that the oversold conditions do not always mean that the marketplace has reached a bear market condition.
Take, for example, the period between the onset of the last bullish market boom and the start of the last bear market crash. During this time, there was a general rise in the price of the cryptocoverage due to optimism regarding the growth of the virtual currency. It was this optimism that encouraged people to invest large sums of money into buying these assets. They did so believing that the price of the bitcoin would rise significantly over the course of a few months. When the bubble burst and the global economy took a turn for the worst, many people lost their investments and had to seek out newer and more secure avenues for securing their livelihoods.
At this juncture, it is likely that the same thing is happening with the current bear market. People are once again pouring into the market in large numbers, buoyed up by the hope that things will turn around again soon. Unfortunately, they may be expecting the maximum of this cycle and may be overly pessimistic about its prospects. This may well be the case as we move into the final few weeks of this year. The good news is that there are some strong support levels in place, though.
So what does this market have to offer for traders? To begin with, it provides a significant number of trading opportunities. While the recent bear market crash saw numerous large losses on the part of traders, those losses were offset by strong support in the market for the currencies of the United States and New Zealand. In contrast, over the past week there have been a number of major gains in the US dollar and the NZD. If you are able to find a strong support level of the market, then this may be a time to enter the market, as the market may remain oversold for a period as the value of the major currencies continues to rise.
On the flip side, if you seek to exit the market before the current trends reverse, then you may need to find other means of getting out. With oversold conditions in place, it may be impossible to find a buyer who can absorb the losses. It may also be difficult to sell your overpriced assets, especially if they are driven by strong positive sentiment. If you find that oversold conditions are hindering your ability to exit, then you may be better off waiting until the oversold conditions subside before selling your assets.
From these strong support levels, you may still be able to find buyers who are ready to buy, but they may be hesitant to do so due to high levels of risk. At this point, it may be a good idea to execute a short sell. Short selling is when you sell an asset while the price is still above the open market price. In the case of the oversold conditions in the US dollar and NZD, this may result in a short sale that is received by the seller, who then pays the seller for the difference – known as a margin call.
A margin call gives you the ability to take a loss and potentially make money if the price does rise enough to absorb the loss. You may find that the market conditions in your country are not conducive to creating a strong support or even where a short sell would benefit from. If this is the case, then it may be best to wait for the market to settle. The more traders that execute a short sell at the correct time, the higher the price will go and the more investors will benefit. There are no guarantees though, as market conditions can change at any moment. For this reason, it’s important to execute your sell order as soon as possible.