Market cycles: how can this influence your trade


Market cycles represent periods where price trends fluctuate following a pattern, which may be bullish (popularly known as the bull market) characterizing an increasing number of people entering and buying the market; and the bearish cycles (known as bear markets) that occur when people exit the market and in turn end up devaluing the price of the traded asset. In this article I intend to help you identify these bull and bear market moments to follow the majority trend and, in turn, not lose money in the market.


Bull market

Bull Market is an expression to say that the market is bullish, vigorous, bullish. With that the flow of people trading that asset is very large and there are some ways for you to identify this optimism, one of them is analyzing market sentiment, although I said in my article about that you should always distrust these indicators and go in In most cases against him, it is still possible to identify a change / euphoria reaching the market:


Note that from February (when the bitcoin bull run started) the fear index came out of 14 (very afraid) and peaked at 94 (extremely optimistic)

Another way to identify this is from the chart. By adding a moving average of 200 periods you can also identify highs and lows:


Here, for example, you would know that the bull run was coming because of the approximation with the moving average of 200. But you would only be sure from the moment the chart went to the upper side.

Note that the term bull market can be used for the general economy or for a specific market such as cryptocurrency which is our focus, but also for real estate, commodities, stocks, etc.

Bear market

Bear Market is the opposite of the bull. The bear attacks from top to bottom, so when cryptocurrency prices fall, along with investor confidence. So we can take the same examples used above by taking the fear indicators and the moving average:


Here we clearly see the fear index going from 95 to 5 (this moment does not indicate a bear run, just a temporary correction that we will use as an example. Positioning new investors in crypto ended up influencing the indicator and showing levels below those reached in bear run ).


Even with the same image used previously it is possible to identify by MM200 that when the chart is below it can mean bear run.


How to use it to your advantage

Note that bull and bear represent general market trends. Therefore, they cannot indicate "master moves" of type "buy cryptocurrency X and you will get very rich". Yes, when the market is bull run the chances that the currency price will overvaluate are very high in the long run, but in the short run this appreciation is not constant and time fluctuations are still present beyond corrective periods when The price trend briefly reverses to balance the market.


Bitcoin follows this 4-year cycle pattern so from this it is possible, even superficially to identify when currency appreciation and devaluation will occur. From this just do the proper analysis and risk management to position themselves in the negotiations. If you are a holder you can identify the patterns of the pairs you are trading and already have the possible market entry and exit moments by taking only the valuations.



Understanding the market cycle is of fundamental importance to know how to position yourself in the market. If you are a novice trader, it is important to learn how to trade following the flow of the market, so if you are a long traded bull run, if you are a bear traded sell run (or stay out of the market to avoid losses as bear trade does not it's easy).


Thank you for reading :D

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cryptocurrencies, introduction and analysis
cryptocurrencies, introduction and analysis

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