Neironix - How to Tell Pump From UptrendCategory: cryptocurrency
The cryptocurrency market is very volatile and some cryptocurrency experiences a sharp rise of 1000% and more in a day. But all of them became useless or very little in the end. This is called a pump on the market slang.
Here are some indicative features that can help you identify the pump and distinguish it from the upward trend.
1. There are no fundamental reasonsThe absence of objective reasons for the growth of tokens while still showing impatient growth is a very standard sign of a pump. In developed markets, sharp quotes often occur when important political or economic statements are made or something important happens, which is the opposite of the pump information vacuum.
When a pump occurs, it means that a small group of people affects the market regardless of all fundamental factors. So, check the news for a while, if you see there it starts forming a quick rise on the coin chart, before opening a purchase order. It won't make you lose the trend.
2. Candlesticks with long upper shadows and small bodies
The nature of the pump in sharp rapid growth which subsides very quickly and changes for the same sharp drop. In the daily period which is usually marked by a candlestick with a very long upper shadow and a relatively small original body. The body usually stays bullish but is very small.
3. Low capitalization
Pumps in the cryptocurrency market often occur in low capitalized assets. They are easier to manipulate because the volume of each order is greater in relation to smaller capitalized assets than in relation to assets with a larger market capitalization. So each order has more impact on assets with lower capitalization.
If you see price movements of hundreds and thousands of percent over a 24 hour to seven day interval, you will see that they rarely exceed $ 10 million.
The screenshot is demonstrative data from the BaaSid trade in the upper line and Mindexcoin on the bottom line taken from CoinMarketCap on September 13, 2018. As you can see, the 24 hour trading volume is quite low while the coins can add 96% and 82.5%.
How is the uptrend different?
Uptrends are usually the opposite of pumps both in fundamental and technical terms. Here are some common features of the uptrend:
1. Positive fundamental background;
2. The highest and lowest turns in the rise even form a channel (4 hours for the daily period);
3. High trading volume;
4. Level of technical support where trends start to move.
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