Supertrend is a trend following indicator. As a trend following indicator, Supertrend indicator was created by Olivier Seban to help traders to know the direction of the market, that is, whether the market is moving upwards or in a downwards direction. Supertrend is based on previous high and previous low.This will help the trader to know the direction of the market. Supertrend indicator has red and blue lines. Blue line indicates the upward market direction while red line indicates the downward market direction. Supertrend indicator is based on ATR of the upper and lower supertrend with a multiplier and therefore is calculated using the following formula; high+low)/2-(multiplier*ATR) Therefore, the bullish and bearish market for Crypto market can further be explained using supertrend as follows;
1. Supertrend bullish cryptocurrency market
Since supertrend indicator is based on previous low and previous high, it therefore follows that when the price in the market falls below the previous low suppertrend point,the supertrend will turn blue thus an indication that the market has gained support over there. This will signal the cryptocurrency trader to purchase a given amount of cryptocurrency with their USDT balance since the market will start moving upwards. The trader can either place a market buy order which will be processed immediately or they can place a limit buy order which will be processed when the market reaches his limit buy order price. This is indicated as from below;
The above is a TRX market against USDT. Two points are being indicated.Point A and point B. Point A which is green and red line is the supertrend while point B is the support point. At point B,the price in the market has fallen below the lowest low point of supertrend thus the supertrend line turns from red to blue thus an indication of support point over there. This signals the cryptocurrency trader to purchase a given amount of TRX with their USDT balance. The trader can either decides to place a market buy order which will be executed immediately or a limit buy order which will be processed when the market reaches his limit buy order. When the order is being processed,the account of the cryptocurrency trader will start increasing in value in terms of USDT.
2. Supertrend bearish cryptocurrency market
Since supertrend indicator is based on previous low and previous high, it therefore follows that when the price in the market rises above the previous high point supertrend,the supertrend will turn red thus an indication that the market has gained resistance point over there. This will signal the cryptocurrency trader to sell a given amount of cryptocurrency which he had previously purchased and is currently holding to avoid declining the value of their trading account. The trader can either place a market sell order which will be processed immediately or he can place a limit sell order which will be processed when the market reaches his limit sell order price. This is indicated as from below;
The above is a TRX market against USDT. Two points are being indicated.Point A and point B. Point A which is green and red line is the supertrend while point B is the support point. At point B,the price has risen above the highest high point of supertrend thus the supertrend line turns from blue to red thus an indication of resistance point over there. This signals the cryptocurrency trader to sell a given amount of TRX which he had previously purchased and is currently holding. The trader can either decides to place a market sell order which will be executed immediately or a limit sell order which will be processed when the market reaches his limit sell order. When the order is being processed,the account of the cryptocurrency trader will have increased in value in terms of USDT.
cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.
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