What is ATH and how to face it?

Apr 11, 2024

Have you ever come across the term ATH while trading? It is a fundamental concept in financial markets that deserves our attention.

The meaning of ATH

ATH, “All Time High”, is not just an abbreviation but a crucial concept. It represents the highest price ever reached by an asset since its existence. When this happens, we do not simply see a number on a chart, but a manifestation of success and power in the market that generates euphoria among investors.

What does an ATH really imply?

We all know that money is made by buying low and selling high. However, when a cryptocurrency hits its ATH, the dynamics change radically. Buying at that point is usually a one-way ticket to significant losses.

During an ATH, the buying pressure completely dominates the market. I have realized that at these moments many traders abandon technical analysis and let themselves be carried away by emotions. A mistake that I have paid dearly for more than once!

Strategies in the face of an ATH

When I identify ATH signals, I always turn to tools like Fibonacci and moving averages:

Impulse Analysis I see the market as a spring that needs to be compressed before it can make another leap. Without a prior correction, there is no energy for new highs.

Fibonacci as a guide The levels 23.6%, 38.2%, 50%, 61.8%, 78.6%, and 100% have saved me countless times as support and resistance points.

Moving Average Inquiry When the price is below the MA, I tend to remain cautious about potential drops.

Rules I Follow

As an ATH approaches, even if it seems there is no resistance, there are always hidden factors. After reaching the maximum, the market enters a testing or adjustment phase that can last for weeks or months.

To minimize risks:

I analyze the breaking process in its three stages: action (overcoming resistance), reaction (weakening), and resolution (confirmation).

I examine candlestick patterns just below the breakout point.

I identify new levels using Fibonacci extensions such as 1.270, 1.618, and 2.000.

I set profit protection by determining my minimum acceptable gain.

I am extremely cautious when increasing positions.

What to do when you are in position during an ATH

If you hold all your assets, you should assess whether the ATH is temporary before making a decision.

If you sell partially, use Fibonacci extensions to identify psychological resistances.

If you sell everything, look for matches between Fibonacci extensions and the ATH price that indicate the end of the trend.

Final Reflection

The ATH plays a crucial role in our investment decisions. Have you faced this situation? Your experience could help us all navigate these critical moments better.

Notice: Contains personal opinions. It does not constitute financial advice. It may include sponsored content.