08-28-2022, 06:23 PM
If you want to trade cryptocurrencies, you need to perform technical analysis to get consistent results.
You need to do some calculations to predict the price movement when trading. Trading becomes a gamble if you just place a buy or sell order based on intuition or guesswork. One of the most important things traders do to get information about market action is technical analysis.
So what is technical analysis, and what crypto analysis tool and indicators do you need to perform it?
What is technical analysis?
Technical analysis uses mathematical indicators to evaluate statistical trends in order to predict the price direction on the crypto market. This is done by looking at past price changes and volume data to determine how the market works and predict how it will affect future price changes.
Technical analysis methods evaluate crypto markets and identify trading opportunities based on price trends and patterns seen on charts. They are based on the belief that a cryptocurrency's past trading activity and price changes are valuable indicators for determining future prices and activity.
Three basic assumptions of technical analysis
Technical analysis is based on three assumptions, which we will briefly discuss in this section.
1. The market discounts itself
This assumption states that everything in the market that could affect the price of cryptocurrencies is reflected in its price. The price tells you everything you need to know about a cryptocurrency value. You don't need to consider the fundamental factors that influence a crypto asset to determine its price movements.
Let's say you notice that the price of a crypto asset is falling. You can use the information in the chart, such as the candlestick pattern, the extent of the price drop, and other technical information to know whether it is best to invest in such a coin at that time.
2. Price moves in a trend
Price movements always show trends, even in random market movements, regardless of the time frame you use. The green and red candles show the trend pattern and the direction of the price.
It is assumed that prices follow a trend. It is more likely that a future price movement will follow an established trend. The price trend can be upward, downward or sideways (to the right).
3. History repeats itself
The repetitive nature of the crypto market means that analyzing past patterns can help you predict future market movements.
Market participants tend to react to market events over time. Even though some chart patterns were formed a long time ago, they are still considered important as they might occur again.
You need to do some calculations to predict the price movement when trading. Trading becomes a gamble if you just place a buy or sell order based on intuition or guesswork. One of the most important things traders do to get information about market action is technical analysis.
So what is technical analysis, and what crypto analysis tool and indicators do you need to perform it?
What is technical analysis?
Technical analysis uses mathematical indicators to evaluate statistical trends in order to predict the price direction on the crypto market. This is done by looking at past price changes and volume data to determine how the market works and predict how it will affect future price changes.
Technical analysis methods evaluate crypto markets and identify trading opportunities based on price trends and patterns seen on charts. They are based on the belief that a cryptocurrency's past trading activity and price changes are valuable indicators for determining future prices and activity.
Three basic assumptions of technical analysis
Technical analysis is based on three assumptions, which we will briefly discuss in this section.
1. The market discounts itself
This assumption states that everything in the market that could affect the price of cryptocurrencies is reflected in its price. The price tells you everything you need to know about a cryptocurrency value. You don't need to consider the fundamental factors that influence a crypto asset to determine its price movements.
Let's say you notice that the price of a crypto asset is falling. You can use the information in the chart, such as the candlestick pattern, the extent of the price drop, and other technical information to know whether it is best to invest in such a coin at that time.
2. Price moves in a trend
Price movements always show trends, even in random market movements, regardless of the time frame you use. The green and red candles show the trend pattern and the direction of the price.
It is assumed that prices follow a trend. It is more likely that a future price movement will follow an established trend. The price trend can be upward, downward or sideways (to the right).
3. History repeats itself
The repetitive nature of the crypto market means that analyzing past patterns can help you predict future market movements.
Market participants tend to react to market events over time. Even though some chart patterns were formed a long time ago, they are still considered important as they might occur again.
