Technical Analysis Techniques For Cryptocurrency
Technical analysis techniques for cryptocurrency
The world of cryptocurrencies has developed exponentially in recent years and many investors and dealers are trying to use potential returns. As a result, technical analysis techniques have become necessary instruments in order to understand and predict the behavior of these digital assets.
In this article we will examine some of the most popular techniques for technical technicians used in cryptocurrency markets. We will discuss your strengths, weaknesses and best practices and give examples of your use in real scenarios.
What is technical analysis?
Technical analysis is a method for analyzing price diagrams and patterns to predict future price movements. It is based on the idea that previous results do not necessarily display future results, but on current market conditions, trends and patterns. Technical analysts use various tools and indicators to identify potential trends, support and level of resistance as well as other market signals.
1. Diagram pattern
Diagram patterns are graphic performance of price movements over time. They offer valuable insights into the trend, the variability and direction of the cryptocurrency. Some common diagram patterns include:
* Head and arms
: A common pattern in which the price creates the head and then the arm and then falls back.
* Double Top/Lower : Two other key points or DNA that finally collapse.
* The opposite head and shoulders : The opposite of the head and shoulder pattern.
2nd medium movable
Medium walking (MA) are mathematical calculations that run smoothly during the time. They offer a value of the cryptocurrency price, with all historical data being taken into account to the current moment. Common Maj include:
* Simple moving average (SMA) : Average cryptocurrency price in a certain period of time.
* Movable average lecture (EMA) : Weighted average mobility, which is more important to the latest prices.
3. Relative strength ad (RSI)
RSI is a popular impulse indicator that measures the size of the latest price changes. It oscillates from 0 to 100, with higher values displaying the excreted conditions.
* curious : value over 70, which indicates excessive shopping pressure.
* oversized : value below 30, which indicates excessive sales pressure.
4. Bollinger ligaments
Bollinger gangs are a variability indicator that compares the closing price of the cryptocurrency with an average price in a certain period of time.
* upper band : upper limit above the current price.
* Lower band : lower limit below the current price.
* bandwidth : area between two ligaments, which indicates variability and potential blemishes.
5. Horiser of support and resistance
Support and resistance levels are of crucial importance in the technical analysis. They represent areas in which the cryptocurrency price is likely to influence or drop. Frequent support levels include:
* Short -term support : A level under which the price probably does not increase.
* Long -term support : A level over which the price will probably not decrease.
The level of resistance corresponds to the level of support and represents areas in which prices can become higher or lower. Examples of resistance levels for some popular cryptocurrencies are:
- Bitcoin (BTC): 6000–7,000 USD
- Ethereum (ETH): USD 400-500
6. Trend indicator
Trend indicators measure the general direction and strength of the cryptocurrency price movement.
* Stochaska oscillator : The rotary display that calculates the percentage difference between the closing price and the movable 14-day average.
* MACD (divergence of the movable average convergence) : The sprout indicator that compares the speed of two average speeds.
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