What is FOMO?FOMO stands for Fear Of Missing Out. It is understandable that when traders see the price of Bitcoin go up, they may want to jump in immediately out of fear that they may be missing out on a big payday. Soon after they bought Bitcoin, the price may correct or fall sharply.
The opposite is true that a trader may want to panic sell their Bitcoin when the price declines sharply. However, in both cases, the trader may lose money.
In order to protect your funds and avoid FOMO, it is advisable to know your Technical Indicators. There are various indicators that can tell whether Bitcoin is turning bearish or bullish.
Signs that Bitcoin is turning bearishEven though no trader will know for sure if the price of Bitcoin is going up or down, there are tools that can assist you make the most informed decision.
Bitcoin breaks the 50-day moving averageThe 50-day moving average is a very popular technical indicators and is used by the majority of seasoned traders. Basically, it’s a longer-term moving average that tracks the last 10 trading weeks. It serves as a good indication of the medium-term trend direction.
Here’s how it works:
- If the slope is up, the market is bullish.
- If the slope is down, the market is bearish.
- If the price breaches the 50-day moving average line to the upside, the price could go higher.
- If the price breaches the 50-day moving average line to the downside, it could indicate a bearish trend.
Overbought RSIThe Relative Strength Indicator (RSI) measures strength and momentum of price. It is measured on a scale of 0 – 100. The general rule with the RSI is “what goes up, will come down.”
Should the RSI reading be above 70, it serves as an indication that the coin is overbought and is due for a correction. If the RSI reading is below 30, it means the coin is oversold and the price could go up.