Lower Low
In the world of cryptocurrency, the term 'Lower Low' can be heard quite often. To simplify it for the beginning crypto enthusiast, 'Lower Low' forms part of a technical analysis that assists in predicting possible future movements of cryptocurrency prices.
Definition
A 'Lower Low' is when the price of a cryptocurrency reaches a new low, lower than its previous low point. This usually indicates that the coin is in a downward trend, potentially signalling an upcoming bear market (which is a term used when prices of coins are falling, and the market is characterized by fear and pessimism).
How 'Lower Low' works
When analyzing a cryptocurrency price chart, consider each low point or 'valley' the price reaches. If the price of the coin drops below its previous low point, we say it has reached a 'Lower Low'. This tells traders that the demand for the coin is declining, as people are not willing to buy at higher prices. This typically starts a domino effect where more and more traders sell their holdings to avoid potential further losses, thereby pushing the price even lower.
Significance of 'Lower Low'
The 'Lower Low' can signify a change in the market trend - from bullish (rising prices) to bearish (falling prices). It can trigger a series of sell-offs leading to a significant decline in the cryptocurrency's price. However, it's important to note that this might not always be the case as crypto markets are influenced by a variety of factors.
Key Takeaways
- 'Lower Low' refers to a situation where the price of a cryptocurrency falls below its previous lowest point.
- This can indicate a bearish (downward) market trend.
- Understanding 'Lower Low' can help traders make informed decisions about when to buy or sell their cryptocurrencies.