With the market capitalization of cryptocurrency having crossed the USD2.3 trillion mark, the domain is turning out to be a digital goldmine with more and more token issuers and crypto investors joining the party. However, in line with the meteoric rise of the cryptocurrency domain, the volatility of the market is essentially a double-edged sword whereby on the one hand there is the potential for swift profits while on the other hand there is the risk of rapid losses. In this regard, it is often the case that market manipulators such as crypto whales who are dictating the ups and downs of the market through their pump and dump activities who manage to make a quick buck at the expense of other crypto investors particularly retail ones who end up with bruising losses.
As the aphorism goes, “to beat the market, you first have to know how to read the market” and it is in this context that technical analysis comes in to offer crypto investors a lifeline to make their investments count. In contrast with fundamental analysis which involves the evaluation of a cryptocurrency’s inherent value, technical analysis involves using real-world data pertaining to the market performance of a cryptocurrency to try to predict its future projections. In other words, the crux of technical analysis is that it entails the use of past trading activity and price changes of a cryptocurrency as indicators for its future price movements. Through the use of technical analysis, crypto investors would no longer have to base their decision-making in a speculative manner based on nothing more than market sentiments but instead their decisions can take into consideration real-world data thereby boosting their chances of reading the market right.
Deciphering the Flicker of Bitcoin’s Flame with Candlestick Charts
A particular form of chart which is proving to be quite a hit in the crypto investment domain when it comes to the use of technical analysis is that of candlestick chart which is sometimes also referred to as the Japanese candlestick chart. In essence, a candlestick chart displays the price movements of a cryptocurrency with each candlestick representing the intra-day changes in the price of the cryptocurrency whereby the four different parts of a candle shows the four points of the intraday price of the cryptocurrency i.e. its opening, closing, daily high, and daily low prices. In general, when the real body of a candle is filled in black/red color, it means the closing price of the cryptocurrency for the day was lower than its opening price for that day whereas if the real body of a candle is empty or filled in green color, it means the closing price of the cryptocurrency for the day was higher than its opening price for that day.
For crypto investors using technical analysis, a notable pattern which they should be looking out for is the bullish engulfing candlestick pattern which indicates the possible start of a crypto bull run. As its name suggests, the bullish engulfing candlestick pattern appears in the form of a long empty/green real body of candle engulfing a small black/red real body of the candle immediately preceding it. The bullish engulfing candlestick pattern indicates that buyers have significantly outpaced sellers thereby signalling the potential onset of a bull run for the particular cryptocurrency because with the bulls having established some control, the price of the cryptocurrency is set to swing upwards.
22 September 2021, there was a big jump in the price of Bitcoin which created a bullish engulfing candlestick pattern in the Bitcoin price chart. Although as it turns out Bitcoin failed to break its September Curse, Bitcoin’s bullish engulfing candlestick pattern triggered by the spike of its price on 22 September 2022 proved on hindsight to be the precursor to the onset of a bull run for the flagship cryptocurrency which price has increased by more than 40% during the period from 22 September 2021 up till 18 October 2021. As is almost always the case, when Bitcoin goes on a bull run the rest of the crypto market tends to follow suit. Case in point is the fact that the total market capitalization of Altcoins has risen by about USD300+ billion during the same period.
Harnessing Toko Token (TKO)’s Price Stability as the Path to Future Prosperity
Besides the use of candlestick charts, technical analysis can also be undertaken through other methods such as moving averages which provide a more accurate prediction of the price of a cryptocurrency by smoothing out the data through the calculation of a constantly updated average price. The more elementary form of moving average is the simple moving average (SMA) which is calculated by taking the arithmetic mean of a given set of values over a specified period of time whereas the more complicated form of moving average is the exponential moving average (EMA) which is a type of moving average that gives more weight to recent prices in an attempt to make it more responsive to new information.
In other words, SMAs provide an indication of the price movement of a cryptocurrency throughout the course of the relevant duration whereas EMAs have a similar function, albeit in a manner which gives more primacy to the data which are newer in time. Low levels of fluctuations in the SMAs and EMAs of a cryptocurrency is a positive sign as it indicates that the cryptocurrency has strong fundamentals which enable it to weather the upswings and downswings coursing through the crypto market much like a tree which is firmly rooted in ground that is unperturbed by strong winds. Accordingly, low levels of fluctuation in SMAs and EMAs bodes well for the mid to long term capital growth projections of a cryptocurrency as it illustrates the strong fundamentals of the cryptocurrency.
In this regard, it is notable that as of 18 October 2021. TKO’s SMAs for the duration of 10, 20, 30, 50 and 100 days stand at 1.968, 1.922 1.888, 2.072 and 1.970 respectively whereby the cumulative percentage change stands at a low 0.717% which evidences the stability of TKO’s price. As of the same date, TKO’s EMAs for the duration of 10, 20, 30, 50 and 100 days, they stand at 1.992, 1.962, 1.972, 1.996 and 2.046 respectively whereby the cumulative percentage change stand at a mere 2.726% which shows that although the price of TKO has fluctuated more of late, the fluctuations are still of relatively low levels though perhaps more importantly from the perspective of TKO investors is the fact that the fluctuations are positive in nature i.e. the price of TKO has generally been on a steady uptick recently.
Given the strong fundamentals and market potential of TKO as illustrated by the high degree of stability and recent rising trend of its price, this certainly bodes well for the token’s mid to long term capital growth prospects.
With the recent appearance of the proverbial Bitcoin golden cross coupled with the Bitcoin bullish candlestick pattern, the signs indicate the dawn of another crypto bull run whereby TKO’s price stability offers a steadfast platform for crypto investors to capitalize on the bullish market and set forth on their path to prosperity.
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