tl:dr? Key takeaways and a useful chart are at the bottom of this post.
Waves refer to a method for analyzing markets called “Elliot Wave Theory” that says the market “ebbs and flows in clear trends”. Like everything else in trading analyzing waves can be as complicated as you want to make it, but we like to keep things simple.
Waves are a type of pattern (just like candlesticks, volume and many other indicators create patterns, cryptopatterns considers them all as part of our analysis to “build our case” for moves in the cryptocurrency markets). Here are 3 keys to waves we use in our pattern analysis that might prove useful in your trading efforts.
1. If you look at investment price charts over years, you can clearly see buying and selling patterns move in waves.
If you know the market moves in waves, and you see these waves repeated over decades and a wide variety of investment vehicles, don’t you think it would be helpful to your crypto trading to know how those waves work and where we are in the “wave cycle”? We do.
2. Exact wave counts are extremely hard to identify in real time, and there are multiple interpretations of which wave we’re in by simply looking at a single price chart.
Just take a look at this example and you’ll see:
chart source: Safehaven.com
3. KEY: Waves come with certain identifiable “market behaviors” and this is where waves can prove most helpful in assessing probabilities in your trading strategy.
Here is a solid overview of those behaviors–pull out a chart of your favorite crypto and see if you can identify the waves using these behaviors.
What’s the takeaway? Learn the basics of waves, and be sure you consider them in your trading strategies or you might find yourself buying when there are screaming red flags that say “now is the time to be selling!”
Of course, you can also subscribe to cryptopatterns newsletter and get daily updates and analysis on our take on wave counts along with other important patterns for all the most important cryptocurrencies as well as newer ones in the market that can give you the edge to trade or invest with probabilities on your side.
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