Ever wondered why the crypto market goes nuts every time a daily, weekly, or monthly candle is about to close? 🤔 Let’s uncover the reasons!
1. Trader Psychology
Many traders rush to close positions to avoid volatility risks as the candle closes. In the trading world, uncertainty can push traders to 'play it safe' by closing their positions. This results in a loaded order book with pending orders, spiking volatility due to a sudden increase in trading volume.
2. Institutional Players
Big players in the investment world like investment funds, institutional traders, and fund managers often rebalance their portfolios at the end of periods. This means adjusting their asset composition according to predetermined investment strategies. This rebalancing requires large transactions, significantly increasing trading volume and causing sharp price fluctuations.
3. Technical Factors
The crypto market often hits crucial support or resistance areas at candle closings. These areas are price points where many traders have placed limit orders. When the price nears or reaches these areas, large orders are executed, leading to rapid and unpredictable price movements.
4. Market Sentiment
Remember, crypto trading usually involves USD pairs. Therefore, news or economic data related to the USD can have a significant impact on market sentiment. Economic announcements like job reports, inflation, or interest rate decisions are often released near candle closing times. This information can trigger quick reactions from traders who adjust their positions according to the latest data.
5. Order Book and Trading Bots
Additionally, the order book can be influenced by trading bots and algorithms. These bots are programmed to execute orders based on specific market conditions, often coinciding with candle closings. The presence of these bots adds another layer of volatility as they can execute large transactions at high speed.
By understanding these factors, you can be better prepared for volatility in the crypto market at candle closings. Always check the candle closing times and prepare your strategy accordingly. Don’t forget to follow my account for more crypto tips and tricks. Let's get those gains! 🚀
