How To Use Technical Analysis For Day Trading

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Using technical analysis for cryptocurrency trading: a guide for beginners

In recent years, cryptocurrency trading is becoming more and more popular, and many investors come to the world of digital currencies. However, for those who new to trade cryptocurrencies, navigating the market can be overwhelming and making informed decisions. One of the strategies that can help traders such as success is the use of technical analysis.

In this article, we will examine how to use technical analysis techniques on cryptocurrency markets, in particular focusing on how to use charts and indicators to predict price movements.

What is technical analysis?

Technical analysis is a method of analyzing chart patterns to predict future price movement. It is based on the idea that earlier results can be used to inform current and future price forecasts. This approach is often contrasted with fundamental analysis, which focuses on the analysis of basic economic conditions or market assets.

Choosing the right chart

When it comes to technical analysis, there are several types of charts to choose from. The most commonly used charts for cryptocurrency trading are:

* Trend lines : These lines are drawn on the basis of historical price data and are designed to identify support or resistance areas.

* Possible average : These calculations are made using current and previous assets prices and can be used to identify trends, pimples and reversal.

* RSI (relative strength indicator) : This indicator measures the change of safety prices over time in relation to price traffic. It is often used to identify the conditions purchased or sold out.

Common cryptocurrency trade indicators

When it comes to technical analysis, there are several indicators that can be useful for cryptocurrency trading:

* STOCHASKA oscillator : This indicator shows two average walking and provides a buy signal when the percentage difference exceeds 80.

* Bollinger bands : These bands consist of an average movable and two standard deviations deleted above and below, providing levels of support and resistance.

* MacD (average mobile convergence divergence) : This indicator imposes two average walking on itself, with a MacD line and a signal line. It is used to identify trends, pimples and reversal.

Using the technical analysis for the trade of cryptocurrency day

How to Use Technical

Now, when we discussed the basics of technical analysis, let’s examine how to use these techniques in cryptocurrency markets:

* Identify trends : Look for long -term price trends, such as a clear upward or inheritance trend. You can use indicators such as stochastic and bollinger oscillator bands to help identify support and immunity levels.

* Specify support and resistance : Identify the support and resistance areas based on previous price and market conditions. Use chart patterns such as head and shoulder, triangles or wedges to define these zones.

* Use indicators to predict price movements : Select the appropriate trade strategy indicator and use it to predict price movements. For example, if you use a MacD line with a signal line above growth pulls, this may indicate a potential reversal.

* Set the detention levels and profit levels : Set STOP-LOSS levels based on key chart patterns or support/resistance zones and set profit levels when the price reaches a certain level.

Sample commercial strategy

Here is an example of a commercial strategy that uses technical analysis to trade cryptocurrencies: