If we want to predict bitcoin price, we need to analyse bitcoin price chart. It may seems complex for the beginners. But fret not, it is actually not that difficult. These charts are normally used for trading purpose. For cryptocurrencies, it is also similar as other trading types.
Dow Theory to analyze bitcoin price
We first need to understand Dow Theory. Dow theory was develop by Charles Dow and has been around for more than 100 years. It is build on a few beliefs, better known as Dow tenets. We must first know that the primary trend cannot be manipulate. Unlike secondary trend or other short term trends (short price movement) which can be manipulate. These are from few hours to few weeks which financial institute, spectators or rumours/ breaking news.
Market reflects all available information
Everything to know is reflected in the Market through price. Same as bitcoin price. This bitcoin price on the chart represent the sum total of all hopes, fears and expectations of all spectators. The different metrics are already inside this chart: Interest rate movements, earnings expectations, presidential elections, revenue projection, product initiatives and so on.
If there is any unexpected area, it will only affect the short term trends.
It is not infallible
Dow theory is a set of guide lines or principles to help traders/investors. It allow ones to see the objectives and helps to make decision less ambiguous. This always help you to see the primary trend. In short, it provide facts without the emotions.