What is the technical analysis and does it suite all the assets types? This is the main question to be outlined in the following article.
First of all, it’s worth saying that Technical Analysis differs from Fundamental one, which will be discussed in the “Trader’s Tools and Fundamental Analysis” article.
So, let’s disclose what the Technical Analysis is
It can be stated that TA (technical analysis) is an analysis of the price chart over time, with the aim of further forecasting prices in the future. TA involves a set of special tools, indicators, oscillators and various lines on the chart. These include SMA and EMA, which we analyzed in one of the articles, RSI, Bollinger, Fibo, and others.
Visually, technical analysis looks next:
But, you know, “more” is not always “better”.
Working with the trading charts, the best way is to use no more than 5 indicators, this set of various tools will allow you to predict the price movement in the future period, but not to overload the chart. We’ll make a more detailed overview of those indicators in our next articles.
The story repeats from the time when the Wall Street traders traded live stocks and offered to buy or sell something calling the customers, shouting “I buy this lot” on the premises, etc. so the stock market was born this way. The first cycle of financial markets is the stock market, the next cycle is the exchange, the third cycle is already a cryptocurrency market.
According to Wikipedia Technical Analysis — is a set of tools for forecasting price changes based on patterns of past price changes during a similar market situation. Theoretically, technical analysis is applicable in any market, but the most commonly used option it became on exchanges.
Today we will tell you to use Technical Analysis in cryptocurrency markets.
Let’s denote 3 main Technical Analysis principles:
- Price includes everything. This means that price currently displays news, rumors, and the mood of asset buyers.
- Price movements are subject to follow trends: For example, if the general price trend is directed upward, then the price will continue to move up until there is a signal for a trend reversal.
- The “neverending story”: If this has already happened before and it happened not once, then most likely the situation should repeat again, as a rule.
Indicators and Oscillators as the main Technical Analysis instruments and they will be the themes for the next articles. Soon you’ll be able to find them in the Binaryx Academy.
Also, many traders work using fundamental analysis, which includes not the current price movement on the chart, but the estimated rise or fall according to the market news or reporting characteristics of the project, such as annual income or release of updates.
Let’s сompare these two analytical types in the “Technical VS Fundamental Analysis” article.