What is Price Action Movement in Cryptocurrencies

What Is Price Action Movement In Cryptocurrencies?

Price action refers to the price movement of a financial asset on the basis of all technical analysis whether it is currency, stock, forex, commodity or crypto. But here our focus is cryptocurrency. Traders use price action as they create trade ideas by doing technical analysis. Because at the heart of technical analysis, traders just look at the previous price patterns to predict future prices and trade accordingly. 

You know how difficult it gets when it comes to technical analysis. Moving averages, Fibonacci retracements, volatility, ratios all create complexities while moving on the chart. And all of these statistical indicators implying only one thing-price. So let’s discuss what is price action and how it forecasts the price movements of cryptocurrencies. 

What is Price Action? 

Analysis of market price information to figure out entry and exit trade opportunities is called price action analysis. Determining how price affects trends in the long or short term is price action trading. It can be done by looking directly at prices as represented by candlestick charts.  

Short-term Price action: 

 It includes the study of historical minimum and maximum breakouts. Both the extremes maximum and minimum attract the attention of traders and it prepares them to act accordingly. When you can identify the highest and lowest values on a chart as the maximum will be the resistance level and the minimum will be the support level. 

Effect in China

Now what happened in china was a reflection of this price action movement. Chinese authorities comments regarding cryptocurrencies severely impacted the price of bitcoin and major cryptocurrencies. But Chinese traders still thriving despite Beijing’s four-year cryptocurrency crackdown. Breakouts can set new long-term trends. As the Chinese government does not like the high volatility in crypto prices, authorities pledged to crackdown on bitcoin mining and trading. It is said that China is set to take further action to restrict Chinese citizens to exchange yuan into cryptocurrencies. 

Traders place stop-loss orders as breakouts occur in the market. Slightly below or above a key level, traders set orders. When these stop-loss orders are activated at scale,  price action could be particularly strong while the attention is focused on the particular area. Chinese traders had the ability to move the market quite significantly according to the data in 2015. Many Chinese traders used a combination of technical indicators to support their price action analysis and they manipulated the market accordingly. 

Huobi, a major cryptocurrency exchange, refused to sell mining machines and related services to new traders in mainland China. It is also claiming to suspend futures contracts, exchange-traded products and leveraged investment products to new traders in a few countries and regions. Another popular digital-currency exchange, OKEx said it can also no longer trade the Chinese yuan with its own digital currency OKB. 

Some expert traders try to manipulate the market by exploiting the dynamic of stop-loss orders. When traders in long position see a support level, they place stop-loss ordered slightly below the level and then try to break the support level by spreading rumors. After this happened successfully, traders stop-losses are activated and they sell the assets at market price. Now suddenly there are a lot of sellers, the price significantly falls rapidly. Now the manipulator can buy the bitcoin at lower prices and short the position by making a profit.

Price action is strong at these extreme situations or at the clear round figures like 500, 1000, because even at round figures, stop losses are activated and people start panic sell and the price moves dramatically. 

Long term price action 

When there are no historic ups and downs, traders depend on round numbers and they expect the trend to continue. Investors started looking 5 to 30 times at the token sale price which can also be a round figure. And whenever you see the exponential movement, that means it will fall soon. Because nothing grows at an exponential rate. At every new resistance level, more and more traders want to sell and take their profit when crypto increases exponentially in the market. And this was the time when China banned the local cryptocurrency exchanges and initial coin offerings also because the crypto market was bullish at that point of time and it results in high volatility in the market. 

By looking at a chart it is approximately possible to forecast the top or bottom. There are thousands of patterns that you can find in online courses and books in chart but it very required you to understand the market. At a high price, buyers stop buying and sellers try to cut off their losses and sell. 

Now, It’s impractical that Chinese traders still take interest or participate in the bitcoin trade. But china’s role in bitcoin thrust back last week after news erupted that financial institutions do not get involved in cryptocurrency trading businesses. Initial Exchange Offerings or IEOs also impacted the market by bringing more buyers to the market, but China has banned IEOs in May 2021.  At the bottom of the downturn, people started to look for new highly speculative instruments that could be profitable for them. And thus, this would attract more people. So interest in digital assets in China is set to rise again.  

Price action helps to identify the trends also whether it is uptrend or downtrend. You can determine an uptrend by identifying the pattern that says every low is higher than the previous one, and a downtrend by identifying the pattern that says every high is lower than the previous one.  These are some basic rules that you should know and you can also find them easily in books and online courses. 

If you compare the crypto market with equity and debt markets, you would have observed that the entire cycle in crypto was really fast as in just two years, there is a parabolic bull market followed by the bear market. And that creates a lot of volatile situations and opportunities for traders. Chinese investors were heavily involved in panic sell due to the crackdown but it was the result of long-term price action movement, not the regulations. 

Chinese bitcoin trading 

As China increased its scrutiny of the cryptocurrency sector, a grey market has been created. Chinese exchanges such as Huobi and OKEx moved offshore as they are not able to be licensed by the authorities on mainland china.

Crypto-to-Crypto trading offered by some of these platforms like purchasing bitcoin with the U.S. dollar-linked stable coin called tether (USDT). Renminbi to USDT conversion service offered by some platforms which allow Chinese traders to get the crypto required to buy bitcoin. 

If someone has purchased Bitcoin, then they can deposit the cryptocurrency by overseas exchanges that allow crypto-to-crypto trading which might be very helpful for Chinese traders as price action movement is associated with it. 

In September 2009, when China ordered the shut down of local cryptocurrency exchanges, traders were trading bitcoin at just over $4,000, and then it soared to higher than $38,000. 

There are more Chinese traders now so major cryptocurrency Bitcoin has gained a magnitude in price and a large number of people are using stable currencies like USDT these days. Now, they no longer have to deal with RMB transfers, they are moving to a USDT payments society and moving into and out of bitcoin that makes Bitcoin an underground currency. China’s efforts to restrain cryptocurrency mining and trading keep adding to the wild price movements in bitcoin and other cryptocurrencies. 

Already down hard from records set this year, traders sold bitcoin and other digital currencies sharply last week after Chinese authorities renewed the pressure on the banks and brokerage companies to curb transactions related to cryptocurrency. Markets stumbled again after powerful super regulators. As authorities pledged to crack down on bitcoin mining and trading, the price of bitcoin fell below $32,000, from over $44,000.

China is trying to hold all possible control in the activities of cryptocurrency trading despite the fact that the country has embraced the technology underlying bitcoin and because of that, it has plans to promote its own digital currency yuan that will be controlled by its central bank. Beijing also trying to ban cryptocurrency-mining activities because they consume a huge amount of electricity, from coal-fired power plants, because the country wants to manage its carbon emissions and take serious actions to curb unconventional climatic conditions. 

The authorities could take further action to eliminate the ways for Chinese traders to exchange yuan into cryptocurrencies in the market.

Price action analysis of a financial instrument makes Chinese traders creating trade ideas. In fact, many traders who practice short-term price action will exclusively use it to identify trade setups. At the same time, some other traders may use a combination of technical indicators to support their price action analysis. So the whole thing revolves around the combination of price action analysis and technical indicators. And the combination of price action analysis and technical indicators can provide more reliable trading signals.

There are various charting tools and chart settings by which traders analyze the price action. The Japanese candlestick chart, the bar chart, and the line chart are some of the most common tools available. All of these work differently to indicate the price action, and traders use them for better identification and interpretation of market trends. It is obvious to know that these chart settings possess unique advantages, and choosing one of them can be the personal preference of a trader.

Candlestick patterns can be an essential part of price action trading. Traders can identify these patterns which recurring formations in price action and use them to create possible trade ideas. This type of trading suggests that the patterns occur again and again in similar ways, so the trade ideas created based on these patterns may have a high probability of success.

Bottom Line 

Price action is the analysis of market price information to figure out entry and exit trade opportunities. Fibonacci retracements, volatility, ratios all these tools use to predict the precise price action movement. The effect of short-term price action in china by historical minimum and maximum breakouts was the crackdown on cryptocurrencies. 

Chinese authorities comments regarding cryptocurrencies severely impacted the price of bitcoin and major cryptocurrencies. But Chinese traders still thriving despite Beijing’s four-year cryptocurrency crackdown. Breakouts can set new long-term trends. Traders place stop-loss orders as breakouts occur in the market. Slightly below or above a key level, traders set orders. When these stop-loss orders are activated at scale,  price action could be particularly strong while the attention is focused on the particular area.

Traders stop-losses are activated and they sell the assets at market price. Now suddenly there are a lot of sellers, the price significantly falls rapidly. Now the manipulator can buy the bitcoin at lower prices and short the position by making a profit. When there are no historic ups and downs, traders depend on round numbers and they expect the trend to continue. Investors started looking at the token sale price which can also be a round figure. 

Price action is strong at these extreme situations or at the clear round figures stop losses are activated and people start panic sell and the price moves dramatically.  At every new resistance level, more and more traders want to sell and take their profit when crypto increases exponentially in the market. And this was the time when China banned the local cryptocurrency exchanges and initial coin offerings also because the crypto market was bullish at that point of time and it results in high volatility in the market. Price action helps to identify the trends also whether it is uptrend or downtrend. 


If someone has purchased Bitcoin, then they can deposit the cryptocurrency by overseas exchanges that allow crypto-to-crypto trading which might be very helpful for Chinese traders as price action movement is associated with it. 

The authorities could take further action to eliminate the ways for Chinese traders to exchange yuan into cryptocurrencies in the market.

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