Day 5 – Understanding Market Trends



You’ve successfully explored exchanges and how to place orders! Now it’s time to learn how to analyze the market.

Prices of cryptocurrencies don’t move randomly. They follow patterns based on demand, news, and investor behavior. Knowing how to spot these trends helps you decide when to buy or sell.

🔹 What is a Market Trend?

A market trend is the general direction in which prices are moving over time.

There are three main types:

  1. Uptrend (Bull Market)
    Prices are rising consistently over time.
    ▶ Investors are optimistic and buying more.

  2. Downtrend (Bear Market)
    Prices are falling consistently.
    ▶ Investors are worried and selling.

  3. Sideways Trend (Consolidation)
    Prices move within a range without a clear direction.
    ▶ Neither buyers nor sellers are dominant.

🔹 Support and Resistance Levels

These are price points that often stop the price from moving further.

  • Support Level: The price at which buyers tend to enter the market, preventing it from falling lower.

  • Resistance Level: The price at which sellers step in, preventing it from going higher.

✔ These levels help you decide where to place buy or sell orders.

🔹 How to Spot Trends

  1. Look at price charts over different time frames (1 hour, 1 day, 1 week).

  2. Identify higher highs and higher lows → Uptrend.

  3. Identify lower highs and lower lows → Downtrend.

  4. If price stays within a range → Sideways trend.

🔹 Example – Bitcoin Trend

Let’s say you’re watching Bitcoin’s price over the past week.

  • Day 1 → ₹30,00,000

  • Day 2 → ₹30,50,000

  • Day 3 → ₹31,00,000

  • Day 4 → ₹31,50,000

  • Day 5 → ₹32,00,000

This shows an uptrend, meaning buyers are in control and prices are increasing.

🔹 Why Trends Matter for Traders

  • 📈 In an uptrend, you might want to buy early and sell at a higher price.

  • 📉 In a downtrend, you may avoid buying or sell to prevent losses.

  • ➖ In a sideways market, you may wait until a breakout occurs.

📝 Example Story

Vikram sees that Ethereum’s price has been going up for the past 3 days. He decides to buy early and sell when the price reaches a higher resistance level. This way, he makes a profit by following the trend.

✅ Day 5 Task

  1. Open the chart of Bitcoin or Ethereum on your exchange.

  2. Identify if the price is going up, down, or sideways over the last 7 days.

  3. Draw or note where you think support and resistance levels are.

  4. Write a short paragraph explaining the trend and how it might affect your next trade.

Tomorrow, Day 6, we’ll learn about risk management – how to protect yourself from losing too much money when the market moves against you.