Sideways Means Flat Market Conditions, Here's the Explanation!

Sideways is a market condition when the price of an asset becomes flat. This time, VCGamers will discuss about sideways.

In this article, you will get information about the definition, characteristics, and methods you can use to make a profit when the price on the market is flat.

Also Read: Recognize this Bearish Candlestick So You Don't Get Stuck!

Sideways definition

Sideways market is a condition when the price of an asset in the market moves flat or horizontal. This happens because demand and supply figures are equally strong at one time.

This condition mostly occurs during the consolidation period, when before the price continues the previous trend or actually reverses the new trend.

In general, these market conditions are the result of strong resistance and support levels for price movements.

This condition then makes price movements tend to be flat for quite a long time before a new trend occurs. This new trend can make the price go up or down.

Volume as an indicator in this trade also remains flat due to bearish and bullish, both of which dominate simultaneously. It can eventually shoot down sharply or shot up.

So, traders should look at indicators when analyzing a sideways market. This is to provide a signal for price direction and when a breakout or breakdown will occur.

Also Read: 5 Ways of Cryptocurrency Analysis for Beginner Traders

Sideways features

The sideways characteristics that you can observe are when the chart shows patterns such as valleys and mountains with short green red candles.

This pattern describes a stable market that is not going down and not going up. However, if you trade when this happens, there will be a risk because it is difficult and quite dangerous.

Therefore, a market that is experiencing sideways can be a momentum for traders to refrain from trading.

In addition to graphical features, you can use various indicators that can act as a guide to see sideways in a market.

Overlays indicator

There are several types of overlay indicators that you can use to see sideways market characteristics. First there are indicators William's Alligator.

This indicator can detect through line patterns that move in the opposite direction. If the direction is opposite, then there will be a trend. However, if the line patterns overlap, then the market is experiencing sideways.

In addition, there are indicators Bollinger Brands which detects market flattening when the chart forms a horizontal pattern with a narrowing channel.

The next indicator is Parabolic SAR. You can use this indicator to indicate flat market conditions by looking closely and smoothly at a signal point on the price chart.

Oscillator indicator

In addition, there is an oscillator indicator that shows oversold/overbought based on price history.

The closer the line is to the zero level, the narrower and longer lasting the sideways will be.

The way to read this indicator is to pay attention to the signal line in the range of 0 to 100. First, the indicator that you can use is the Indicator Accelerator Oscillator or A.O.

The indicator is suitable because when volatility is low, the histogram bar will shrink and fluctuations occur around the baseline.

Secondly, there is a named indicator Relative Strength Index or RSI. This indicator can show the ratio of the average price increase to the average closing price increase.

The absence of divergent conditions as an RSI trading signal will be a sign of sideways in the market.

Lastly, there are Indicators Average Directional Index Movement or ADX. This ADX indicator can show the strength and direction of a trend.

The algorithm is quite sophisticated and has minimum delay in predicting market movements.

If the ADX signal is at a level below level 20, then the trend will be indicated to be weakening and the price will move flat.

Also Read: Get to know the Flag Pattern: Definition, Characteristics, and Types

How to Get Profit

There are ways to profit when the market is trending sideways or flat.

According to Investopedia, the first stage is as a trader you have to look for breakdown or breakout explanations and finally take advantage of price movements using a separate strategy.

You can also profit when the price moves when the support and resistance are in sideways conditions. This can make it easier to determine when to enter and exit.

In addition, there is a stop-loss feature that you can use below the sideways support level to minimize losses.

Thus the discussion about the sideways crypto market.

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