Crypto Trading Technical Analysis with Infographics
Hi Steemers, Good day! Today I've gathered more information from the different web-pages and combining into this content. It is all about crypto basic technical study.
Proponents of technical analysis believe that by studying the “pattern” of how coin’s price has change in the past, it is possible to predict how the price will change in the past, it is possible to predict how the price will change in the future. -Stuart R. Veale
Also, technical analysis is a trading tool employed to evaluate securities and attempt to forecast their future movement by analyzing statistics gathered from trading activity, such as price movement and volume. Unlike fundamental analysts who attempt to evaluate a security's intrinsic value, technical analysts focus on charts of price movement and various analytical tools to evaluate a security's strength or weakness and forecast future price changes.
Commonly used technical indicators include trendlines, moving averages and momentum indicators such as the moving average convergence divergence (MACD) indicator. -tradingview
To get a better idea of technical analysis, it is crucial to understand the fundamental ideas of Dow Theory that tech analysis is based on:
The market considers everything in its pricing. All existing, prior, and upcoming details have already been integrated into current asset prices. With regards to Bitcoin and crypto, this would be comprised of multiple variables like current, past, and future demand, and any regulations that impact the crypto market. The existing price is a response to all the current details, which includes the expectations and knowledge of each coin traded in the market. Technicians interpret what the price is suggesting about market sentiment to make calculated wise predictions about future pricing.
Prices movement aren’t random. Rather, they often follow trends, which may either be long or short-term. After a trend is formed by a coin, it’s probably going to follow that trend to oppose it. Technicians try to isolate and profit from trends using technical analysis.
‘What’ is more important than ‘Why’. Technicians are more focused on the price of a coin than each variable that produces a movement in its price. Although multiple aspects could have influenced the price of a coin to move in a specific direction, Technicians assertively review supply and demand.
History tends to get repeated. It is possible to predict market psychology. Mostly, in cryptocurrency, traders sometimes react the same way when presented with similar stimuli. -cryptopotato
Candlestick Patterns, What is a Candlestick?
A candlestick is a tool used to show the highest price, lowest price, opening price and closing price of a cryptocurrency for a specified period (e.g. 1 minute, 5 minute, 15 minute, 30 minute, 1 hour, 5 hours, 1 day, 1 week, etc.). The colored part of the candlestick is known as the “body” and tells traders whether the closing price was higher or lower than the opening price. Black and red candlesticks indicate that the cryptocurrency’s price closed lower than it opened. White and green candlesticks indicate that the cyptocurrency closed at a higher price than it opened.
Below is an info-graphic of the basics of candlesticks:*
Single Patterns
A candlestick pattern is a specific movement in prices shown on a candlestick chart that can be used to predict the direction a market is headed.
Below are some single candle stick patterns and what they mean:
-attached images via cryptocoinconnection
Marubozu: This is a very easy candle to spot. Whether the candle is green or red, there is no “shadow to the candle and the body is long and typically dwarfs the previous candle in length. This means that the market was strongly bearish or strongly bullish depending on whether the candle was red or green.
Standard: The standard bullish or bearish candle is one that you will come across most often. There are shadows on both ends of the candle and neither the body nor the shadows are extraordinarily long. Not much can be interpreted from a single standard candle, however, numerous standard candles in succession can form patterns that do give us an idea of where the market is headed.
Hammer: A hammer is a candlestick that occurs when a cryptocurrency’s price falls significantly lower than what it opened at, but rallies later during the period to close above or near the opening price. A hammer may suggest that a trend is reversing and that the price has either found its top or bottom.
As you can see, a hammer candlestick looks just like a candlestick, with the body being the head and the lower shadow being the handle. For a candle stick to be considered a true hammer, the lower shadow has to be at least twice as long as the body.
Spinning Top
- A spinning top is formed when the open and close prices are close together despite there being a wide range of prices throughout the period. This candle can be taken as an indecision between buyers and sellers and occasionally may be followed by a reversal. If a spinning top forms after a lengthy bearish or bullish trend, it suggests that the trend is losing momentum and a reversal may be soon at play.
Inverted Hammer/Shooting Star
- The inverted hammer/shooting star is another candlestick that may signal a trend reversal. As you can see, the inverted hammer/shooting star is an upside down hammer candlestick.
Doji Star
- A doji star is created when the open price and close price of a cryptocurrency are the same.The doji star represents indecision on the buying and selling sides. There is an even amount of buying and selling pressure, so the price ends up going nowhere.
The doji star can be taken as a sign of reversal, however it is also commonly a sign of consolidation. The doji star appears to be a sign of consolidation, or stable prices before a trend continues, more commonly with cryptocurrencies than stocks. Additionally, the doji star is more likely to be a reversal sign on the minute and hour chart, while being a sign of consolidation on the larger time period charts such as days and weeks.
Long Legged Doji
The long legged doji is a doji star with exceptionally long upper shadows and lower shadows. It suggests a larger class between buying and selling forces and, like the typical doji star, can be a sign of trend reversal or consolidation.
Gravestone Doji
The long upper shadow and non-existent lower shadow of the gravestone doji suggests that the period’s buying buying pressure was reversed by sellers and that the supply and demand at the price point is reaching equilibrium. This pattern is commonly used to suggest a trend reversal may be in the works. -cryptocoinconnection
Common Reversal Patterns
Technical Analysis of Bitcoin Charts – The Most Common Patterns
When you intend to become a successful Bitcoin or Cryptocurrency trader it is crucial that you have an idea about technical analysis. You have to know all common chart patterns which are repeated frequently in the Bitcoin charts. Those patterns help you to estimate the likeliness of a certain market behaviour in the near future.
There are different groups of chart patterns:
Bullish patterns indicate the likeliness of an ongoing uptrend. Bearish patterns signal that the price is relatively likely to move further downwards. The third group are the reversal patterns: Those few well known chart patterns often signal that the predominant trend is ending and you can expect a price breakout in the opposite direction.
Although those patterns are absolutely no guarantee for a certain market behaviour, it is still fact that the likelihood for the expected market move is significantly higher than another behaviour.
Basically this chart analysis can be used to create your trading plan in advance. Meaning that you should have a plan in advance, based on the analysis, where to set your orders, dependently from what you expect the market to do soon.
Professional traders use those patterns together with the so called Fibonacci retracements. This kind of chart analysis must be seen in the same way as the pattern analysis: They indicate the likelihood of certain stops and breakouts of the market price, although they of course give no guarantee for anything. Again the indicators give you an idea where you should put your targets in advance, for instance to set profitable stop limit orders at points which are most likely going to be hit.
The 3 Groups of Common Chart Patterns
Bullish Patterns (price going up)
- Flag
- Pennant
- Measured move up
- Symmetrical triangle
- Ascending scallop
- 3 rising valleys
- Cup with Handle
- Ascending triangle
Bearish Patterns (price going down)
- Symmetric triangle
- 3 descending peaks
- Descending scallop
- Descending triangle
- Flag
- Invertede Cup with handle
- Measured move down
- Pennant
Reversal Patterns
- Head and shoulders top
- Tops rectangle
- Double bottoms
- Diamond bottoms
So when you are looking at the Bitcoin charts or the graphs of any other tradable asset, you should be able to identify those patterns immediately. Just take a moment to learn how they look like, you’ll quickly get familiar whith those patterns – especially when you start to recognize them in the real price movements. -bitcointradingsites
Hope this help! Apologize for the long article, aiming to have combined information into one basic crypto trading content, that's why😊 Don't forget to Hit follow for more articles like this and get the latest update. By the way, advance charting will be also publish soon, stay tuned! Shout out to those details that I've inserted on this article, including bitcointradingsites, cryptopotato, tradingview, cryptocoinconnection, and Sir Stuart R. Veale.
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