Everyone loves a bull market for cryptocurrency, but every green wave is inevitably followed by periods of sideways or bearish movement.
Experienced traders know that these stages of the market cycle can also be full of profit opportunities. Not only does it predict bullish movements in the price of a digital asset, deflation and corrections can be helpful in deciding when to get out of a position and make a profit, as well as help increase profits by short selling falling cryptocurrencies.
In addition to understanding and common sense, data analytics tools can help you predict price declines. An AI-based indicator that can help investors see early signs of an upcoming downturn is the VORTECS men score, available exclusively to Cointelegraph Markets Pro members.
Its job is to sift through years of historical data and find out if the combination of market conditions and social conditions around each asset is similar to what preceded a sharp up or down price movement in the past.
At any given time, a high VORTECS for-score for a cryptocurrency means that the outlook is historically positive; However, low scores below 30 indicate that observed patterns in the past have often been accompanied by price declines.
Red VORTECS result results are less common than dark green results. The most common scenario where these results can be seen is when cryptocurrencies rise rapidly, become overbought, and then massive corrections occur.
Here are five notable cases where red VORTECS ™ results flashed on cryptocurrencies before their prices fell.
Dog: Memecoin overheats
VORTECS ™ result (green / red) versus DOGE price, 8.-15. April. Source: Cointelegraph Markets Pro.
Dogecoin (DOGE) presented an example of very high and very low VORTECS ™ that followed each other in the week of April 8.
The asset’s valuation crossed 80 on the morning of April 13, when the price curve was still flat at $ 0.073 (first red circle). Apparently, the model sensed the well-known event with celebrity tweets and increased circulation. Less than 12 hours later, the price line followed, reaching $ 0.141.
Even before the price reached its peak, the algorithm indicated that Dogecoin’s historic gains were followed by a bounce as VORTECS ‘dots fell negatively below 30. A correction to $ 0.110 followed a few hours later.
While the VORTECS result is not intended to tell investors when to buy or sell, it can provide a useful indicator of bullish or bearish conditions for a particular asset – information that can be profitably incorporated into a trading strategy.
COTI: huge climb, difficult to get into
VOTECS ™ (green / red) result vs. COTI Prize, 21–27. August. Source: Cointelegraph Markets Pro.
After a sharp increase from $ 0.29 to $ 0.45 during the hour of August 26, the COTI price began to correct.
It quickly fell to $ 0.37 and then tried to gain bullish momentum again, rising to $ 0.42.
At this point, the VORTECS ™ algorithm recognized the similarity between observed conditions and previous COTI price corrections, and flashed a red mark (red circle on the chart) while the price continued to rise. The eruption was in good shape, within two hours the COTI turned its course and fell to around $ 0.35.
Closure: fall or legs left?
VORTECS result (green / red) compared to nearest price, 5.-12. September. Source: Cointelegraph Markets Pro.
From September 7 to 9, the NEAR protocol went from $ 6 to $ 11.58 in three days. All cryptocurrency traders have a question: where will NEAR go next?
Hours after the price peak, the VORTECS falt symbol fell below 30 pips (red circle on the chart), informing Markets Pro subscribers that the historical precedent points to an impending decline rather than a new round of growth.
The price of NEAR was around $ 11 and continues to rise while the result flashes red; After 36 hours, the price drops to $ 9.
NMR: red dots at the top of the price
VORTECS ™ result (green / red) versus NMR price, 2.-8. April. Source: Cointelegraph Markets Pro.
Numeraire (NMR) performed well on April 4th and 5th and was still approaching the top of $ 78.07 when VORTECS fell below 30 (red circle on the chart). This indicates that a corresponding increase in NMR was previously followed by a rapid decline in prices.
Admittedly, the correction began less than two hours after the low, and the NMR price fell to around $ 63 over the next two days.