The supply and demand trading strategy is a popular approach used in financial markets, including the cryptocurrency market. It's based on the principle that the price of an asset is determined by the balance between the supply of the asset available in the market and the demand from buyers.
In this strategy, traders identify key levels of support (areas where demand is strong) and resistance (areas where supply is abundant) on a price chart.
When the price reaches a support level, it is expected to bounce back up due to increased demand.
Conversely, when the price hits a resistance level, it may drop as there's more supply than demand.
Crypto markets can be highly volatile and the supply and demand strategy can help traders make more informed decisions by analyzing price patterns and market sentiment.
However as with any trading strategy, it's important to exercise caution, conduct thorough research and manage risk appropriately.
Trading cryptocurrencies carries inherent risks and it's essential to be aware of the potential for significant price fluctuations.
