Now I know some people are savvy and have seen this before, but there are many who see this correction (price drop) and panic. Take a look at the below chart and I will walk you through it. There are 2 yellow circles, the one on top is the actual price action and the one on the bottom is my favorite indicator for Bitcoin the Relative Strength Index (RSI). Note the white dotted line on the top and bottom then the purple area in the middle. If the RSI indicates that we are above the top white dotted line this means we are over bought, if we are below it, it means we are over sold. Now when you are considering a Stock, Crypto Currency, or even a Precious Metal the first thing you want to do is your research. The research is what tells you that this item may or may not be worth investing in. Once you decide that this is something to consider then you look at the news and progress of this potential investment. So in the case of Bitcoin I researched to the point where I took a certification course on Bitcoin which convinced me that it is the future of the internet because in my opinion for the internet of things (IOT), to function properly we need block-chain technology. While there are many more reasons I believe in Bitcoin like the fact that it is unregulated and allows us normal people to day trade (regulated markets do not allow day trading unless you have a trading account with over $25,000). So this unregulated market is a place where the masses can achieve wealth (which is why Jamie Dimon and the bankers hate it, if you have wealth you don't need their credit cards and loans). It is also a bank, you can keep your money save in the Block chain, have access to it anywhere without having to carry cash with you. You can also store your identity on the Block-chain or your digital data etc, look up (sia.tech and www.civic.com to see about that). But back to my point so that was my research and I encourage everyone to do theirs before investing in anything. Now once that is all done now we look at the charts. While there are many indicates out there they all have their purpose and some work better than others in different markets. As long as I have been tracking Bitcoin the RSI, the 50 and 200 day moving average has always been a great indicators for me. Back in 2018 using the moving averages (50 & 200 day), I read the Death Cross that called for the bear market, and last month I spotted the Golden Cross the indicates the Bulls have returned. But in this article I am calling attention to the RSI. As you can see the RSI has been indicating overbought meaning that the Bulls have bought so much Bitcoin too fast and this momentum can not be maintained for long. The line was moving up, but then it turned down indicating that the momentum shifted from positive (upward movement), to negative price moment. The RSI then fell down back to where it is now, between the upper and lower limits of the RSI. If the RSI line is still moving down the momentum is negative and the price will likely continue to move down, if it gets below the bottom line that means that too many people sold too fast and it will likely turn around and start moving up.
Now lets take all of the information above and consider it for a basic strategy for trading (this is just to show you one example of how some people trade and I have done this in the past). If you have already completed your research, are completely convinced of the value of your asset. You have checked the news and considered any upcoming news such as (Earning statement for Stock company, main-net launches/upgrades for Crypto Currencies, Mines closing/opening for Precious Metals. Then you can watch the moving average and price action for signals (this article has some candle stick patterns to look for https://blog.gt247.com/six-candle-stick-patterns). ### And lastly you can watch the RSI closely, when the price is way up over the overbought line and the momentum turns to the downside, Sell. When the Price has moved down and the momentum turns back to the upside again Buy. Many people do this all day long and continue to add to their bitcoin holdings
Basically this correction was expected, prices of everything cannot just continue to go up forever, people will start taking profits at the top and sell, others will see the selling and sell themselves, this causes the correction. Also consider that Bots are running and these bots are just looking at signals then making trades based on them, this also affects the price movements.
I am not a financial adviser and this is not financial advice, I am simply showing some things that investors do. Invest at your own risk.
