Market breadth is a technical indicator assessing the overall participation of assets in a market’s price movement. It measures the proportion of assets that are advancing compared to those declining, providing insight into the underlying strength or weakness of a market trend. When a large number of assets are moving in the same direction, it suggests a broad and healthy trend. Conversely, a narrow market breadth, where only a few assets drive the movement, can signal potential instability or an impending reversal. This metric helps confirm market trends beyond just observing major index movements.
Context
In cryptocurrency markets, analysts use market breadth to determine if a rally or decline is supported by widespread participation across various digital assets. News often references market breadth indicators to validate the sustainability of bull or bear markets. A declining market breadth during an apparent rally, for example, would be a critical development to watch for, signaling potential weakness.
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