spot trading

Cryptocurrency Technical Analysis What It Is

Profitable trading or investing system needs to identify a proper entry point. by using Cryptocurrency Technical Analysis techniques it can be done. for those beginners in the world of crypto, here is a list of basic concepts you need to know.

What is technical analysis?

Imagine you’re going to the grocery store and you want to purchase some materials.

Idea 1

before shopping, you check google map reviews and check bloggers’ pages, and then you will make your decision

Idea2

before entering to store you’ll check in order to realize which store is more crowded and then you’ll select the most crowded one.

Technical analysis is similar to the second idea.  By use of candlestick charts we try to study the past activity of the market and then we can find the opportunity. the common idea is market tends to behave to repetitive patterns.

To simplify traders are willing to buy when the price moves at low levels and will sell at high levels in the future, therefore, making a profit. 
using Technical analysis before opening a position is one method to identify a suitable entry point.

Cryptocurrency Technical Analysis The Basics

Candlestick Charts

Candlestick charts display the high, low, open, and closing prices of a security for a specific period.

as we can see we have two types of candlesticks. Bullish and bearish.

in bullish the closing price on a specific time frame is higher than the opening price and versa reversa in bearish candlestick.

 

Every candle consists of two parts, body, and shadow. shadows represent the maximum and minimum price.

 

Support and Resistance Levels

Support is a price level where a downtrend has a chance to stop due to the pressure of buying. As the price of assets drops, demand for the assets is likely to increase, thus forming the support line. Meanwhile, resistance zones arise due to selling interest when the price is moving in an uptrend channel.

bitcoin support and resistance
bitcoin candlestick support and resistance

Relative Strength Index (RSI)

 

The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the price momentum of an asset.

investors and traders use the RSI with other indicators to identify opportunities to buy or sell assets.

 

 

 

Moving Averages (MAs)

A moving average is a technical indicator that investors and traders use to declare the price direction.

The three most common types are simple, exponential, and smoothed.

more posts: best cryptocurrency trading platform for beginners

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button