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Greetings Steemians

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I trust everyone is doing great today. The price movement of cryptocurrencies in the last few days has given investors little hope ad the price recovers a little bit. Now, this is not time to panic or FOMO(fear of missing out) in the market because of the little upward movement.

The mistake most traders to is that they failed to understand the difference between retracement and reversal. This case is usually seen among novice traders. As soon as they see a little price movement, they are excited to jump into the market with the fear of missing out.

Retracement is not reversal and I will explain this in this post. When we talk about retracement, we talk about the slight movement of price in the opposite direction after a long trend. Retracements usually happen as a result of profit-taking. This creates an opportunity for traders to enter the trend again at a relatively low price.

Retracements are always against the original trend. Price tries to retest some key levels before continuation of the original trend. To further see a retracement clearly, a trader should focus on the higher timeframe which is a timeframe to determine the direction of price. Looking at the lower timeframe will trick you to believe that price has reversed.

Reversals

When we talk about reversals in the market, we see a change in the original trend. Price reversal is accompanied by a break in market structure which shows that the previous trend is invalidated.

Spotting reversals early are a great way of entering the market on time. This enables you to have tighter stoploss and higher take profit. Reversals are accompanied by breaks of key levels like support and resistance.

Also, we can use other technical analysis tools like indicators to determine price reversal. For example, a cross of the moving average above and below price is a reversal signal. Indicators lag or lead behind price and we all know that. Price mist has moved to a certain point before the indicator signal. For this reason, we should focus on price action for a clear signal and then use the indicator as a signal confirmation tool.

Having explained these concepts, we will look at the STEEM/USD to know if this is a price reversal or a retracement for the continuation of the original trend.

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STEEM/USD Technical Analysis

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Just, as usual, this chart will be carried out on Tradingview.com.

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From my previous analysis on STEEM/USD, we predicted for price to retest the broken support level now turned resistance. This will happen only when the minor support holds price from going down further.

Now looking at this chart, you can't say this is a reversal. Notice that price hasn't broken any key level and also, price is still trading below the moving average. This can be a retracement for price to continue down.

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If the current price movement turns out to be a retracement, this means that we will see a price drop back to the minor support level for a continuation of the bearish trend. This will happen when the selling pressure exceeds the buying pressure.

Let's look at the possible scenario to confirm a trend reversal on STEEM/USD.

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Looking at the chart above, we have the markup to confirm trend reversal. A break above the resistance level will indicate a price reversal. This is a break of structure from a bullish to a bearish trend. Also, we can see that if this scenario happens, it will also lead to a break of price above the moving average which serves as further confirmation for the price reversal.

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At this point, price is just making corrections known as a retracement. There's no valid trend reversal signal yet. I hope we can keep this in mind why we wait for the reversal we all want in the market.

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Note: This analysis is based on my personal opinion and knowledge. This is for educational purposes and not a piece of investment advice. Please do your own research and invest what you can afford to lose. The crypto market is highly volatile and risky.

Cc: @reminiscence01