Cryptocurrency trading demands spontaneous and thoughtful action. Your one right action can lend you to windfall gain, likewise, a wrong approach can wipe out everything you accumulated over time. Therefore, understanding the market patterns is of paramount importance. Leading and lagging indicators help you read the crypto trading market. They are an important tool for technical analysis. Interestingly, experienced and naïve both can make use of them.
Leading indicators point toward future events and it helps you with your crypto trading investment in the futures market. Changes in leading indicators signal a bigger change in the market or economy. They reflect the bull or bearish sentiment of the market and serve as a tip for economists and investors. The recent rise in the prices of bitcoin or altcoins is a leading indicator of a promising time for the cryptocurrency stakeholders.
As mentioned, leading indicators provide information about trends that are yet to emerge. They have been used by economists for years to predict good or bad times for businesses across many sectors and verticals including stock, retail, real estate, etc. Leading indicators may be used for predicting potential recessions or recoveries.
Lagging indicators are based on historical economic performance or previous price data. Again, it serves as the raw data for crypto trading experts and investors who are interested in the descriptive as well as diagnostic analysis of the market or economy to plan their future investment.
Though like leading indicators, lagging indicators are too helpful for futures market strategy they can also be used in the technical analysis of short-term or intra-day trading. For better accuracy, support your lagging indicator data with Candlestick chart, and Trading view data available with PCEX Member as shown in the above image. Moving averages are also a key indicator to know sensitive points along with a trading curve.
Apart from the two mentioned above, there exists a coincidental indicator too. It provides real-time technical analysis for crypto or any asset market. It’s one of the oldest technical analysis tools that is applied across traditional markets as well. GDP (Gross Domestic Product), industrial production, personal income, and retail sales fall in this category. GDP is also a type of lagging indicator as it’s based on historical data. Coincidental indicators are key numbers that have a substantial impact on the overall economy.
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