Have you heard about successful people in doing cryptocurrency trading? There are a lot of people who have been successful. Using cryptocurrency technical analysis.
There are some key factors to consider when trading. If you used them well, Perfect! You’re a successful cryptocurrency trader.
One of these key factors called “Technical Analysis”. Here’s the basic introduction to cryptocurrency technical analysis.
Many people do cryptocurrency technical analysis because it is the easiest method and it’s a smart way. Technical analysis is some kind of forecasting technique used to predict the next pattern of a cryptocurrency chart.
In other words, Technical analysis is a study of characteristics of market trends to pointing down the opportunities to trade by using historical price and volume data.
This technical analysis can be used with any platforms such as forex, cryptocurrencies and binary options.
Okay, Let’s get into the topic.
How does this technical analysis work?
There are two market trends that we need to discuss. Which is,
Uptrend and Downtrend (check out this article for more)
This is the basic pattern of an uptrend and this how you can identify an uptrend. When the price graph of a cryptocurrency act like this, The graph pattern is “uptrend”
Refer to the above image for downtrend basic. When a cryptocurrency price changing chart looks like this, It’s a downtrend.
These two symptoms are the basis of the technical analysis.
Here’s the best part,
Have you heard of Support and Resistance? Let’s talk more.
What Is Support and Resistance?
The support zone is when falling the price of a cryptocurrency, A point which has more potential to stop the price falling and start rising, is the support zone.
The resistance zone is when rising the price of a coin, A point which has more potential to start falling, is the resistance zone.
Let me show you with explanation image.
This is a 6month bitcoin chart that I took from tradingview.com
The support zones are highlighted in green. But as you can see, when you draw a tangential for each support and resistance. They are aligned with the tangential.
This is the fact that I wanted to share with you.
When trading, You should use the same strategy as above to make perfect tradings.
But, Remember. This is cryptocurrency and it’s price mainly depending on the demand. All these technical analyses things should work but not exactly 100%. You better keep that in mind.
Besides, This is some kind of a forecasting method to make opportunities in trading.
I found an awesome sack of ideas here, Based on candlestick patterns. Researching candlestick patterns may also helpfull.
I hope my basic explanation of cryptocurrency technical analysis is worth to you
Now it’s your turn.
Have you succeeded in doing technical analysis for cryptocurrency?
Sharing your ideas is really helpful.
Leave a comment.