Momentum Market Trends - Trading Parabolic Price Trends

What is a Momentum Trend?A momentum trend is a trend that has more momentum than the previous one; this new trend can be drawn using a much steeper trend line than the one that was in place before. When a new trend line forms that is much steeper than a previous one we say that the trend has gained extra momentum and becomes much stronger. These types of trading setups require a different type of market technical analysis.

In the example below: Also when price is moving upwards within a channel, if it breaks the upward channel a stronger trend is formed as shown in the diagram below. If as a trader your price chart breaks an upward trend line to the upside in an upward moving market like the one below, Do not Try to Sell, Buy More Contracts, Remember this Bitcoin trading tip it can make you a lot of money just like the way it did in the trading analysis below.

Momentum Price Trend - Channel Break Upwards - More Momentum on Upward Trending Market

Using the same technical analysis example above we can also see how new steeper trend lines were formed showing the market trend was gaining momentum.

Bitcoin Trading - Momentum Bitcoin Trends

This is shown by the steeper trend lines that can be drawn as the price movement progresses.

The newly formed upward trend has more momentum than the previous one as shown by the formation of the steeper trend line.

This new trend forms trend B and C as shown in the diagram below drawn using the MetaTrader 5 software, the momentum added a new steeper trend line as drawn on the bitcoin price chart above.

This is shown in the example below by the three trend lines A, B and C showing formation of stronger market trends as the market continues to gather momentum.

Bitcoin Price Gaining More Upward Momentum

This strategy can also be used by short term Bitcoin traders like the scalpers and daytraders. These parabolic trend lines can be used to show where to open trades. A trader should follow the trend and only open trades in the direction of these momentum trends.

How to Trade These Momentum Price Trends Setups

The momentum trend lines are good technical tools for determining where to take profit early before other traders. This momentum trading setup occurs frequently on 1 minute, 5 minute and 15 minutes trading charts and therefore suitable for scalpers and day traders. For day trading which is most common the best chart timeframe to use is the 15 minutes sometimes the 5 minutes, for example after entering a short term trade such as a buy trade and the market moves some pips in your favor and you spot this pattern then it is best to open trades in the direction of the momentum trend lines.

Trading the Momentum Market Moves

Parabolic Trends - What is it?

Sometimes market prices move in a parabolic manner, and this is seen when panic buying sets in and price of Bitcoin is driven vertical. During a parabolic upward move, there is almost a complete absence of sellers, which creates a vacuum of buying. When this occurs traders rush in to just get into the market regardless of price, in fear of being left behind. This parabolic trends can make the largest price moves in the shortest amount of time, traders will just keep placing buy orders in this setup.

For this type of move it is best to keep buying - no need for technical analysis just keep buying.

This trend will last for months on end even up to years, for this time just keep buying and as long as those weekly and monthly trend lines are holding just keep buying and buying.

When the steepest trend line is broken it is best to exit this buy trade and wait for another trade setup - either another buy trade or sell trade.

Parabolic Market Trend

As a trader if you come across a parabolic trend in an upward trending market just keep buying and buying some more - you will make a lot of profits, there will be no added technical analysis required just the trend lines. The only thing to remember is to exit once the steepest trend line is broken because the reversal on this trading setup can also be very fast you need to also be very fast. Just make sure you exit at the correct spot while trading this setup.