The Purpose of Technical Analysis

[Whited35 15285]

If you dream to be a good cryptocurrency trader, you need some most essential technical skills to analyze the market situations based on historical data and trading volumes on different trading platforms. If you are a beginner in cryptocurrency trading, do not worry, these articles attempt to demonstrate essential techniques to perform technical analysis.
Technical Analysis
It is a process to study cryptocurrency market conditions based on historical data and trading volumes by applying different analytical tools. Technical Analysis is a practical approach to help traders to make further trading strategies because it is responsible to change market psychology. It does make the sense because the majority of traders follow the previous trends and chart patterns to make further moves.

 

Key terms to understand
1. Trends and trend lines
Bullish Trend: It is also known as an uptrend. In a bullish trend, the price of cryptocurrency is going up.
Sideways trend: In this sideways trend, the price of assets neither falls nor increases. It just follows a horizontal path. 
Bearish Trend: It is also known as a downtrend. In a bearish trend, the price of cryptocurrency is going down.

 

Trend Line
It is an abounding line to show price movements from low to high. Have a look at the figure. 

 

 

2. Support and resistance
It is extremely important to understand these two terms:-
Support: It is a lower level at which the bearish trend is expected to be paused and the price rebounds to that mark.
Resistance: It is the highest level at which a bullish trend is expected to be paused and price reverts to that mark.

3. Moving Averages
Traders analyze the market momentum by locating the moving average. It helps to identify support and resistance levels for some specific time frame. 

 

 

How to read Candle Sticks charts?
Every candlestick in a trading chart consists of opening and closing prices. 

 

 

Bullish vs Bearish
Bullish Market: In this type of market, buyers compete with each other to grab orders by setting the higher price mark. You can see bullish candles going up.
Bearish Market: In this type of market, sellers compete with each other to grab orders by setting the lower price mark. You can see bearish candles going down.

 

Volatility Check

Generally, cryptocurrency markets are volatile in nature. Have a look at following diagram.

 

 

Overbought and Oversold
Overbought:-It is the state of the market when cryptocurrency is massively bought and it will be the best time for a trader to sell his asset.
Oversold:-In this state of the market, sellers sell their assets at the cheapest rate and it will be the perfect time for a buyer to purchase cryptocurrency at the cheapest rate. 

 

 

 

Trading volume and price connection
Keep it in your mind, the bigger the trading volume, the better will be price trend for cryptocurrency. Have a look at the following chart. 

 

 

Conclusion:- In essence, Technical Analysis is done according to already available data. Sometimes, it may fail to predict market momentum correctly and in that condition, beginners could lose important opportunities. So it is better to perform according to situations.

Thank You😊!
 

[GanBin 705]

Thanks for this good tutorial, it will really help anyone that want to know about technical analyses, I find it useful as a newbie because I want to learn how to trade. I hope to see you around teaching us how to trade. 

[rekter 8129]

@Whited35, i see that you are planning to collect all the prices for the compo. :). Very good post.

 

However i am not sure how reliable indicator volume is in crypto TA though...

It's really hard to count for bigger coins as they are being traded all over. And for example most of the reported eth volume is faked if we count overall volume. So maybe we should only use individual charts from exchanges and trust that they represent a bigger share from the overall volume then coingecko and coinmarketcap tells us.

[Whited35 15285]

2 hours ago, rekter said:

However i am not sure how reliable indicator volume is in crypto TA though...

It's really hard to count for bigger coins as they are being traded all over. And for example most of the reported eth volume is faked if we count overall volume. So maybe we should only use individual charts from exchanges and trust that they represent a bigger share from the overall volume then coingecko and coinmarketcap tells us.

@rekter So I have mentioned in conclusion, alarming the newcomers that technical analysis has some limitations as it can not accommodate the future events for the considerations. Some exchange exhibits the fake trading volumes and experienced traders can detect something is not going well by noticing and comparing the chart patterns on different exchange sites. Trading volumes, at their core, affects the price momentum in the most of the cases for top ranked coins like BTC, ETH on good exchange so this matter is covered in my topic  😉

[George10 9932]

@Whited35 This is wonderful topic my friend it is full of more information that can help each and everyone who is venturing in trading as you have elaborated it in a smart and clear manner,I have also taken few things from your post since trading is about upgrading our knowledge each day and we should not be lazy or seize to learn if we want to behold success.

[Whited35 15285]

14 minutes ago, George10 said:

@Whited35 This is wonderful topic my friend it is full of more information that can help each and everyone who is venturing in trading as you have elaborated it in a smart and clear manner,I have also taken few things from your post since trading is about upgrading our knowledge each day and we should not be lazy or seize to learn if we want to behold success.

@George10 Hope  newcomers also understand some downsides of technical analysis. If technical analysis is performed correctly, it surely helps traders to find the best possible trading opportunities in the cryptocurrency markets.Myself, technical analysis is a part before diving into any sorts of Forex or Cryptocurrency tradings. I hope this tutorial helps so many readers. 

[Dorjoy12 8962]

On 10/25/2020 at 7:52 PM, Whited35 said:

. Support and resistance
It is extremely important to understand these two terms:-
Support: It is a lower level at which the bearish trend is expected to be paused and the price rebounds to that mark.
Resistance: It is the highest level at which a bullish trend is expected to be paused and price reverts to that mark.

@Whited35 lets explain support and resistance more easily.. 

Support :  support means when a coin price going down but suddenly the price start to go up  from a place and that place called support.. Actually in support place you can find out lot of buyer who support coin hardly.. 

Resistance : its actually mean a place where coin price cant go more high so the coin price start to drop but later when the coin able to find out once more support place then the coin price can go high than the previous resistance place     . And that place called resistance where has lot of seller and they are hurry to sell coin..        

Edited October 26, 2020 by Dorjoy12

[Ridam 7455]

2 hours ago, Dorjoy12 said:

@Whited35 lets explain support and resistance more easily.. 

Support :  support means when a coin price going down but suddenly the price start to go up  from a place and that place called support.. Actually in support place you can find out lot of buyer who support coin hardly.. 

Resistance : its actually mean a place where coin price cant go more high so the coin price start to drop.. And that place called resistance where has lot of seller and they are hurry to sell coin..        

@Dorjoy12 Exactly, and we can easily find out the support and resistance in the chart. I prefer to use small triangle for the resistance and support as for further analysis it helps and includes many support and resistance in that area.

Also remember previous resistance could change into the support for the spike and it's the good time for entry too.

@Whited35

You have really explained about TA in such a easy way and covered almost all necessary information. I think this post should be pinned as it's very helpful for all members. @epidemia Have a look here😊.

[Whited35 15285]

15 hours ago, Ridam said:

 

@Whited35

You have really explained about TA in such a easy way and covered almost all necessary information. I think this post should be pinned as it's very helpful for all members. @epidemia Have a look here😊.

@Ridam Thanks for your appreciation my brother 🤩. I tried my best to present all the basic concepts for performing technical analysis in case of cryptocurrency tradings. Wait, another series for this topic is under construction and I let community to know other important details regarding cryptocurrency tradings and technical analysis. 

Edited October 27, 2020 by Whited35

[Ridam 7455]

11 hours ago, Whited35 said:

@Ridam Thanks for your appreciation my brother 🤩. I tried my best to present all the basic concepts for performing technical analysis in case of cryptocurrency tradings. Wait, another series for this topic is under construction and I let community to know other important details regarding cryptocurrency tradings and technical analysis. 

That will be great. I hope you will also include and try to explain about the Bullish Reversal Patterns in easy way as this post is. @Whited35 I was learning TA with investopedia and YouTube content and you are also added to that list.

[Whited35 15285]

5 hours ago, Ridam said:

That will be great. I hope you will also include and try to explain about the Bullish Reversal Patterns in easy way as this post is. @Whited35 I was learning TA with investopedia and YouTube content and you are also added to that list.

@Ridam Of course, next topics will attempt to answer almost all the questions related to the technical analysis. Topic should be containing the core technical concepts that newbies may not get it clearly so I am struggling present them in easy-to-understand languages with the illustrative graphics.Thanks again my brother. 

[Raqeebzy 6456]

@Whited35 friend, no words. I am just impressed. 

For those forum members who are new to trading and for inexperienced traders like me, this will give a good foundation knowledge to trading journey. Particularly, the way each is supported with a graphical representation is what I have found interesting and so much educative. I learn a few. Thanks.

Edited October 27, 2020 by Raqeebzy

[Whited35 15285]

14 minutes ago, Raqeebzy said:

@Whited35 friend, no words. I am just impressed. 

For those forum members who are new to trading and for inexperienced traders like me, this will give a good foundation knowledge to trading journey. Particularly, the way each is supported with a graphical representation is what I have found interesting and so much educative. I learn a few. Thanks.

@Raqeebzy I am constructing another part for the technical analysis with all the missed information. It will be more informative and characters counts will not be restricting me 😉. I put my full efforts to create more tutorial topics my brother. I give you guys my best what I have learnt in tradings over the past 5 years. 

[Oxygen99 1930]

This is indeed a good positive topic which has explained much about the technical analysis and i hope many people who have the ambition of trading come across this topic because reading this topic now make me realize that technical analysis gives good guide towards the market and by that traders will have ideas on when to sell for good profit.

[Syedbesharat 5423]

As a crypto trading it's a marvelous content you have placed at forum for newbies and interesting for members. Who can use it for refer and to refresh their memories. This topic contain all. Which is needed simple Words ,graphic chart and key points and mostly the language is used is very simple. Those who don't have full command can understand it. The technical. Analysis tools must be know to every newbie. 

[Jaafar Fahad Hassan 114]

2 hours ago, Oxygen99 said:

This is indeed a good positive topic which has explained much about the technical analysis and i hope many people who have the ambition of trading come across this topic because reading this topic now make me realize that technical analysis gives good guide towards the market and by that traders will have ideas on when to sell for good profit.

That's why it is very good to read a topic in any section you want to improve yourself,, technical analysis gives alot if guides , if one hadn't read the topic and just say he'll reply and move, how can that's person understand how technical analysis is

[Projectcrypto 4382]

Technical analysis is very good for traders who want to make good profit to there wallets and that is why i recommend all newbies to focus in reading this topic so that they can have some tips about technical analysis which will enable them earn something reasonable in th future while trading coins.

[Oxygen99 1930]

5 hours ago, Jaafar Fahad Hassan said:

That's why it is very good to read a topic in any section you want to improve yourself,, technical analysis gives alot if guides , if one hadn't read the topic and just say he'll reply and move, how can that's person understand how technical analysis is

There is not way my friend and it is very risky to respond to a topic without understanding what it means because if you post something that is not related to the topic definately you might likely face the wrath of the moderators whenever they come across the post in the forum.

[Mark wood 2970]

17 hours ago, Projectcrypto said:

Technical analysis is very good for traders who want to make good profit to there wallets and that is why i recommend all newbies to focus in reading this topic so that they can have some tips about technical analysis which will enable them earn something reasonable in th future while trading coins.

@Projectcrypto thanks for suggestion us as we want to get information from members here and I want trading but at now time I'm getting some information about it so it is essential to have information that's why I'm reading that post which you mentioned, really it is helpful for us..

[tienda 8776]

Thanks @Whited35 great topic with a valuable technical analyse information. To be a good cryptocurrency trader, we need to be prepared good about many things and essential tips like technical skills to analyze the market situations. And is very important to do the analyse in many platform not just in one, because the price move globally.

[GanBin 705]

I learn today about high low open close that can be easily reviewed using technical analyses, which shows the time a trade will open and close, and also show the open and the closing price. I think technical analyses is cool and easy to understand. 

[Jaafar Fahad Hassan 114]

18 hours ago, Oxygen99 said:

There is not way my friend and it is very risky to respond to a topic without understanding what it means because if you post something that is not related to the topic definately you might likely face the wrath of the moderators whenever they come across the post in the forum.

Thank you my friend, I really don't know about that, I will be very careful in posting what am not sure about, I will only post thing am confident are right, thanks for the guidance always ,I appreciate

[Whited35 15285]

6 hours ago, tienda said:

Thanks @Whited35 great topic with a valuable technical analyse information. To be a good cryptocurrency trader, we need to be prepared good about many things and essential tips like technical skills to analyze the market situations. And is very important to do the analyse in many platform not just in one, because the price move globally.

@tienda Highly appreciated my friend 😍 ! At least, I have you like friends on this forum to inspire me to create more informative posts. Let me allow to create more informative tutorial posts in future. If you still have some questions about Technical Analysis(TA), kindly file questions to this community for the further discussions. Thanks. 

[Jandancoin 482]

There is many reasons for technical analyses, the one I know is to know the price of money, it can be bitcoin, fiats, gold, silver, diamond and many like that, it will display the price accurately over certain period of time. 

[Whited35 15285]

31 minutes ago, Jandancoin said:

There is many reasons for technical analyses, the one I know is to know the price of money, it can be bitcoin, fiats, gold, silver, diamond and many like that, it will display the price accurately over certain period of time. 

Price of money ? What do you mean here , friend 😜? Technical analysis is performed by collecting the already available data so please get it clearly, it may not predict the price of some specific coins with 100% accuracy at all.