What is a cryptocurrency fund?
A bottom, bottom, or floor price is the lowest price a cryptocurrency has traded at over a period of time. Therefore, the period in question depends on the unit of time that is looked at. We can have a one-year low, a quarterly low, etc., just like we can have intraday lows for short-term traders.
The notion of background is often mentioned in connection with a downward trend. The bottom would then be the transition between the downtrend and a possible uptrend.
When Bitcoin falls, the bottom would therefore be the point where the price of the crypto stops falling and eventually rises.
In the chart below, Bitcoin marks a bottom highlighted by the green circle.
Since market funds are historically the best times to buy (and the worst times to sell) assets, everyone wants to know when the fund will form, and there is often a lot of speculation.
Unfortunately, the funds are often discovered after the factand good timing is easier said than done.
But there are technical signals that we will see that do not buy at the absolute bottom, but just above it.
How to identify a bottom by looking at the chart (price action)
Using technical analysis, one can identify a bottom by looking at the chart. Here are 3 patterns that can be formed during dips.
the double bottom
The double bottom is a chart pattern that indicates that the market has probably bottomed out. It consists of 2 holes that have the appearance of a W. The ends of the 2 holes have substantially the same prices.
The horizontal line that crosses the price level of the highest level of the pattern is called the neckline or neckline in English.
The bullish breakout of the neckline is often seen as a confirmation of the bottom and the bullish rally, as well as a buy signal.
read also 3 trending cryptocurrencies: Bitcoin (BTC) and Ethereum (ETH) are gaining popularity, Solana (SOL) could hit $120.
In the chart above, Bitcoin is falling, making a double bottom and breaking the neckline to the upside. Even if we missed the absolute background at the end of the channels. We could have bought into the cleavage break.
the triple bottom
As its name suggests, the triple bottom is made up of 3 channels whose ends have substantially the same prices. It’s like adding another V to the W. The triple bottom is slightly similar to a pattern called shoulder-head-shoulder reverse. For this last figure, the price of the channel in the middle is lower.
As with the double top, the break of the neckline signals confirmation of the bottom and recovery to the upside. Some investors take it as a buy signal.
the rectangular bottom
Price action may continue to draw bottoms beyond the 3 bottoms. We then have a formation of a rectangle, which is in theory a figure of continuation of the already established trend.
That is, if we have a downtrend followed by a rectangle, the latter will most likely break.
But if we have a break in the neckline on the rise, we take it for a rectangular hem. We have above the background formation in rectangle.
If these 3 formations do not appear systematically in the moneyyou can still take advantage of them as soon as they appear to buy with conviction.