The market meets the forecast

Days ago we had already commented on networks that the appearance of the graph was clearly bearish. From a technical point of view, there was no doubt that the trend was to see price declines, and that has come true.

As we have always said, this is not an exact science, and now it is not a question of wanting to attribute credit that does not correspond to having 'correct' the direction. This happens a certain percentage of times, it's that simple.

What is certain is that for any technical analyst, the configuration of the graph encouraged them to think of a market fall.

Looking for reasons

Now we can do what we always do, which is try to find a reason for this fall or descent. We can talk about the restrictions on Bitcoin withdrawals from Binance, due to network congestion problems, which had not been experienced until now and which can be attributed to the Ordinals phenomenon.

Or we could talk about the impact of the last FED meeting, whether by chance or not, the reality is that each FED meeting has an impact on the evolution of the price, and despite fulfilling the forecast and rising 25 bp, the effect is on the graph and we are not making this up.

But in the end, as always, everything influences the markets and has its share of participation. In addition, we must not forget that they are cyclical by nature, meaning that we can be faced with the circumstance that this bullish cycle has simply ended, without further ado.

Putting it in perspective, we have risen from 17,000 to touching 30,000, that is almost 100% appreciation since the beginning of the year (YTD)

Identifying the signal

Many times in the market the problem is not to identify the direction as in this case, which seemed clear, but the intensity and duration of this movement. Without a doubt, this is the key and the great mystery, because as much as there are people who affirm it, nobody has an answer to this question, it is simply a game of probabilities.

So, faced with this great uncertainty, our main task as traders is to define a series of criteria from which we are going to make our decisions, trusting that the game of probabilities is in our favour.

Otherwise, for that we will have adopted a Monetary Management strategy that limits losses.

Trading in the markets is always based on managing our probability of success

And now you will ask me: What criteria can I use?

Well, it will depend on your operation and your way of seeing the market. What if I am going to tell you, that it is very important that:

The chosen criteria must be clear enough to help us make investment decisions

We have to follow what the criteria tells us, and I am going to give you an example

Evaluating the market with algorithmic trading

A very interesting way to evaluate the market is through algorithmic trading, and the reason is that it is a deterministic and exact criterion. When we talk about algorithmic trading, things happen or they don't happen, there is no middle ground. There is always a point or a price level from which events are triggered, regardless of other factors. Therefore, it is an ideal tool.

Apart from meaning in itself, operational by itself, algorithmic trading can give you that exact criterion when evaluating the market.

How can a trading system help you?

If you take a trading system as a reference to evaluate the market, it is clear that it will be able to tell you if the market is bullish or bearish, with the corresponding error percentage.

That is a great advantage that saves you the work of evaluating and thinking, and above all questioning your conclusions. The great advantage is that by doing so you can assess the reliability of the signal, based on the results of the system.

That is one of the utilities that I give to one of my systems with cryptoassets. I also operate it in different timeframes so I have more market information. But as I have told you, I can evaluate the reliability of the signal based on the results indicated by the system.

And in this case, we have had a clear signal.

1. The 4 hour timeframe is the most reliable in this case.
2. We have had the opening of short positions in this timeframe, both in ETHUSD and in BTCUSD

So our forecast right now, following this indicator and its success rate, is that the market is clearly bearish, so what we have left is to look for support areas.

Disclaimer

Remember that these posts are merely educational. I explain my methods and my way of seeing the market, but you as a trader must find your own way. If you want, I can help you with my personalized SHERPA plan

You have more information at FOREXPeriences.com