Technical analyze of assets
Technical analyze, aka TA is not so boring or difficult as you may think. But…
What is TA?
- TA is stock or commodity market technique analyzing market action such as price, trading volume and market interest.
- In stock exchange, TA analyses past price changes hoping to forecast future price changes
Let us be honest. Technical analysis and trading look difficult. But…
Buying or selling is more than joining lines in TA and exists for thousands of years.
TA mostly focuses on price alone. Not on fundamental metrics and analysis with tokenomics, network activity, teams, macro economics, partnerships, … as used by HODL people who seek to evaluate the long term price of an asset.(Hodl is slang in the cryptocurrency community for holding a cryptocurrency rather than selling.
The candlestick chart, which is one of the most used TA methods, was invented by a Japanese genius trader going by the name of Hunma Munehisa. He described and defined the main streams of market psychology, still used today.
Human psychology, fear and greed follow patterns… they can be predicted. Which brings us to short and long term movements. Use both TA and fundamental analysis to gauge your assets in general.
Charles Dow brought those principles into the western markets and founded wall street journal. THE Dow Jones is named after him!
The crypto market is very volatile, speculative and drives mainly on emotions… which makes it even harder to predict and follow up. All depends on of your choices.
What is a candlestick chart?
A candlestick chart is used by traders all over the world to gauge the price of an asset.
One candlestick represents a unit of time (variable) and according to its length up or down traders will take profits and prices may drop/or buying the dip with prices going up.
Green = buy
Red = sell
But…
Support, resistance lines can be drawn, giving some perspective on future evolution of the prices.
And Trading volumes do sustain the price trend and confirm the price changes.
Triangle patterns are the most reliable tools, determining resistance and descending or support and growing.
Some great indicators on the short term
Moving averages, with average prices over time (EMA) with dead and golden crosses
MACD also studies the averages and seeks to valuate the trends
RSI shows over and under valuated assets
Bollinger Bands shows volatility
Your trading strategy will be based on all of those… buying dips or selling profits.
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