Cryptocurrency trading with technical analysis to master
The cryptocurrency trading world is fast and unpredictable. With the increase in decentralized currencies such as Bitcoin, Ethereum and others, merchants are constantly looking for new ways to gain an advantage in this space. One effective technique used by merchants for cryptocurrency volatility is technical analysis (TA). In this article, we will investigate how to use technical indicators for daytime trade in cryptocurrencies.
What is a technical analysis?
Technical analysis is a method of evaluation of financial markets based on historical data and chart models. This includes the analysis of the charts to predict future price changes, rather than rely solely on essential analysis or sentiment -based views. Technical analysts review various indicators such as moving averages, relative strength index (RSI) and Bollinger bands to determine trends, support and resistance levels and potential purchase or sale signals.
How to use technical analysis for day trade in cryptocurrency
- Select a chart platform : To use technical analysis, you will need a reliable chart platform that supports cryptocurrency. Some popular opportunities are Tradingview, Metatrader 4 and CMC.
- For example, if you look at Bitcoin (BTC/USD), you can use BTC/USD on your chart platform.
- Open the chart : Open the chart of the currency pair of your choice and analyze it using technical indicators.
- Identify models : Look for models like:
* Trends: Long -term trends such as a rise or downturn, which can mean potential purchase or sale signals.
* Support and resistance levels: Set levels when prices tend to bounce, indicating potential support or resistance.
* Indicators such as RSI, Bollinger bands and averages (MA): These indicators can help assess market moods and predict price changes.
- Analyze a chart candle : Study chart candles to set:
* Bullish or Bear Candles: This indicates a possible change in trends.
* Teddy bear replacement models: Look for models such as a hammer, shooting star or inverted head and shoulders that can show a possible change in the trend.
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* Volume analysis: It helps to understand market moods and price changes.
* Market mood indicators: as a relative strength index (RSI) or stochastic oscillator, which may mean a market attitude towards certain assets.
- Make a trading solution
: Based on your analysis, make the trading solution using selected indicators and chart models. You can use:
* Purchase signals when prices are interrupted above support level or reach new heights.
* Sell signals when prices are interrupted below the resistance level or reduced to the lower lowest.
Example: Bitcoin (BTC/USD) Technical Analysis
Let’s analyze the BTC/USD pair of traditionview using some technical indicators:
- Average average : 50 days MA is $ 33,500 and $ 200 MA-32,000.
- Relative Strength Index (RSI) : RSI is currently 70, which shows too much too much.
- Bollinger Group : Upper Bollinger Band reached the highest $ 36,000 and is now below the bottom bar.
Based on the following indicators, we can determine:
- A possible change in the trend when the price is interrupted over 50 days MA (buy a signal).
- Due to excessive conditions due to RSI display over 70.
- In the last few days, Bears Candle Models showing a potential change of bear.
Conclusion
Technical analysis provides a powerful tool for merchants who want to browse the complex and unpredictable world of cryptocurrency trading.