We have seen a lot of talk about forks being bad for the economy, with some arguing that it will hurt investment. There is no doubt that investors would lose money if the price of the currency forks. However, many Forex traders are saying that a large number of these forks over the last couple weeks actually has been beneficial for the market. This is because a lot of people lost money on these moves but instead, made a ton of money on the opposite side of the fork.
When a currency forks it changes its price and this movement can create new price action patterns. The size of the move can be dramatic or subtle, but both always have a positive impact. A large price move usually increases liquidity. Investors can buy at a cheaper price to get out before the move gets to fast and they make a lot of profit. They buy at a higher price because there is more supply and they make more profit.
This is similar to what happened after Google went into bankruptcy several years ago. Investors were scared and they sold their shares in the beginning of the bubble. They didn’t know if the stock would crash but they had a pretty good indicator that it wasn’t going to.
With the price, you don’t have to go on a great many big moves like that. Small price action patterns are much more reliable. In fact, the pattern of a particular currency’s price action can reveal a lot about its future potential. It gives you an idea about its sustainability and also shows you when it is likely to break out. In this article, we will discuss why you should use price action to guide you into trades using the Bitcoins Price History graph.
We all know that most of the major currency pairs have very high moving averages. Most people think they are pretty safe and they trade them with their stop loss set at somewhere around the average. But there is one thing you must understand. Even if the price of a currency goes below the moving averages, this doesn’t mean you should sell just yet. You should ride out this low for as long as you can before entering the price action pattern.
There are 2 major price action patterns, you should look for. The first of these is the moving average convergence divergence or MACD. The MACD shows the direction of price change with time. It uses the distance between two moving averages to indicate price change. All you have to do is enter the moving average line and it will automatically highlight support and resistance areas. Using this indicator, you can pick out which currencies will breakout and which will stall out.
Another price action pattern, you should look for is the simple moving average convergence or SMA. The SMA indicates a strong price change over the course of a certain period of time. This price action pattern is a little more difficult to use. In this case, you need to find the best moving average trend to use instead of the MACD indicator.
To use this price action pattern, you just need to find the best moving average trend that has an upward slope. Then you simply enter the value of the line you have drawn along the slope. You must be careful to enter the value as close to the current price as possible. This will indicate that the current price is weak and that a breakout is imminent. Then you simply set your stop loss accordingly. This will protect you from any negative impacts on your trades when the price of forks.