How Does the Concept of “Market Structure” Apply to Identifying Trends in Crypto Assets?
Market structure is the pattern of price swings, specifically the sequence of highs and lows. An uptrend is characterized by higher highs and higher lows (HH/HL).
A downtrend is lower highs and lower lows (LH/LL). A true reversal involves a break of the previous market structure, for example, a downtrend changing to a HH/HL sequence.
Glossar
Identifying Trends
Analysis ⎊ Identifying trends is the foundational analysis in quantitative finance, involving the determination of the prevailing directional bias in an asset's price movement over a specified time horizon.
Lower Highs and Lower Lows
Pattern ⎊ Lower highs and lower lows define the structural characteristic of a downtrend in price action, signifying a consistent shift in market control from buyers to sellers.
Higher Highs and Higher Lows
Momentum ⎊ The concept of "Higher Highs and Higher Lows" within cryptocurrency derivatives signifies a sustained bullish trend, characterized by successive peaks exceeding previous highs and troughs surpassing prior lows.