ATH is a familiar and common term in the cryptocurrency market. The beauty of an asset hitting ATH is that everyone who bought the asset made a profit. Find out what ATH is through the following article with Finnews24 .
Finnews24: What is ATH?
What is the term ATH?
All Time High is often abbreviated as ATH, this term refers to the "peak" price of a cryptocurrency, any asset from the past to the present time. If investors buy at the bottom of any cryptocurrency and sell at the “top”, there will be a huge source of profit. Conversely, if you buy at the “top” and sell at the bottom, you will suffer a large loss.
Example : Ethereum bottomed in 2018 at $150 and by 2021 has reached an ATH of over $4,000. If you buy at $4000 and will likely lose if you enter at this point.
What to do when ATH appears?
Investors need to use indicators in technical analysis such as: Fibonacci, moving average ... to determine the profit taking point. If ATH appears, then this is the time when investors should enter a sell order, specifically as follows:
Measure price dynamics
With this method of measuring price dynamics, you can imagine the market like a spring. If the spring wants to turn on strongly, the process of gaining momentum must also have an equivalent motivation. Therefore, in order for the market to rise to the ATH level, it will also have to undergo a period of stabilization or decline in order to gain momentum and have a breakthrough in the future.
What to do when the market appears All Time High
Therefore, when using this method, investors can rely on actual observations in the market to determine when to place orders.
In particular, the method of measuring price dynamics can be applied on different time periods, so it is preferred by many investors.
Apply Fibonacci
Fibonacci is an indicator in technical analysis consisting of a series of digits starting from 0 and 1 with the following numbers being the sum of the previous 2 numbers. Investors can use Fibonacci to measure support and resistance levels.
From the series of numbers, one can analyze the most commonly used ratios: 23.6%, 38.2%, 50%, 61.8%, 78.6% and 100%. These points are usually horizontal to help identify support and resistance points.
Apply Fibonacci when the crypto market appears Fibonacci
In the chart above, it is easy to see the values corresponding to each Fibonacci ratio as follows: 42,505, 49,233, 53,395, 56,759, 60,122, 64,912 and 71.012. In which Fibonacci 23.6%, 61.8% corresponding to prices 49,233 and 60,122 act as support and resistance points.
In this case, if the ATH after 64,912 breaks through the resistance at 78.6%, there is a possibility that the price will continue to grow. Conversely, if ATH just stops at resistance and bounces back, the price will reverse from bullish to bearish.
Refer to the moving average MA
Moving Average, also known as moving average, is often used by investors to predict future movements in the cryptocurrency market. In case the price of any asset is below the MA, it is likely that the price is trending down. Conversely, in case the price of any cryptocurrency is above the MA, the uptrend will continue.
Moving averages should be considered in the presence of ATH
However, for this method, investors need to determine the exact time frame so that the price trend is best represented.
Important Trading Rules When ATHING
Once the price of any cryptocurrency hits ATH, there will be no more resistance. The following are the rules when trading when investors meet ATH.
Analysis of the price process to the ATH
This process usually takes place in 3 stages:
Stage 1: The price of an asset breaks above an important resistance level
During this time, the buyers dominated and the price and volume increased out of control.
Stage 2: The buying force tends to decrease gradually
When the price of any asset reaches the ATH, investors will take profits, causing the sellers to start to dominate. The price can continue to move higher, but it is also likely to be pushed down.
Stage 3: Result monitoring & commenting phase
During this period, investors can monitor the OBV (On Balance Volume) indicator to determine whether the market trend is following personal judgment or not?
Review the price pattern structure
During the trading process, investors need to pay attention to the bullish candles, and it will be below the bullish spike point. In addition, the pattern of round bottom and square bottom is also decisive to help investors make accurate decisions.
Locate new potential resistance levels
Let's use Fibonacci at the lowest and mark the points 23.6%, 38.2%, 50%, 61.8%, 78.6% and 100%. And the most potential resistance points are 61.8%, 78.6% and 100% where new tops of any cryptocurrency appear. Here, investors can proceed to sell orders to take profits.
Always set Stop Loss to stay profitable
Investors need to set a certain target for themselves, and this is the time to enter a sell order as well as a stop loss if the price of a cryptocurrency has a reversal from up to down.
Consider carefully when you want to increase your position
When the price of any cryptocurrency is in an uptrend, placing a buy order can bring in a profit. However, if you buy at the wrong time, it is inevitable that loss is inevitable. Therefore, traders should only increase their long positions when the market is showing signs of increasing.
Conclude
Thus, above we have provided you with all the necessary information about what ATH is, what to do when ATH appears as well as trading rules with ATH. If investors determine the time when ATH appears as well as know the necessary trading knowledge related to this indicator, it will help investors make significant profits. Follow Finnews24 's technical analysis section to learn more about other indicators.
