Learn crypto technical analysis is currently one of the most popular methods to identify trading opportunities. Thanks to the use of indicators and analytical skills to optimize trading. So why is Technical Analysis widely applied? How to learn and master this method? Let’s explore with the Crypto Trading through the following article.
Learn crypto technical analysis to master trading
It can be said that to trade and invest in cryptocurrencies successfully, you need to have a deep understanding of each specific cryptocurrency as well as the entire cryptocurrency market. Therefore, learning crypto technical analysis is extremely important.
What is technical analysis?
Technical Analysis (TA) is an analytical method that studies price behavior. At the same time, it studies past trading volume to predict future trends.
This method is not only widely applied to stocks and other assets in the traditional financial market. It is also an indispensable part of cryptocurrency trading.
For example, through technical analysis, it is possible to determine reasonable entry and exit points. For example, the entry (buy) point can be determined when the price breaks the downtrend (the next low is lower than the previous low). Using the Fibonacci tool, we can measure and find the exit point (sell). Determining the right entry and exit points can help us earn up to 40% profit.
Why do traders need to learn crypto technical analysis?
The foundation of technical analysis is the content of “DOW Theory”. It was introduced by Charles DOW through his writings. DOW Theory has put forward the prominent principles that govern the market. In order to create the foundation for modern technical analysis through charts.
Learning crypto technical analysis is really necessary because:
- Prices will reflect the information of the entire Crypto market. Prices are the clearest expression of the law of supply and demand and reflect market psychology. By filtering information through price fluctuations, you can form a basis for analysis. From there, you can make judgments about the future.
- Prices will always follow a trend over time. Whether you analyze on a short-term or long-term time frame, prices tend to repeat a pattern from the past. Current price action is a reliable basis for analyzing future trends.
- Technical analysis can be learned and practiced through practice. If you are new to the market and macro knowledge is too difficult to access, technical analysis is a good place to start. Through practice, your skill of judging historical price data will improve.
- Numbers don’t lie: Using technical analysis helps you stay away from emotional decisions. Increase your winning probability and ensure profits. Especially when trading Margins or CFDs.
The Nature of Crypto Technical Analysis
Technical Analysis is the process of studying past price movements. In order to predict future price trends. The basis of technical analysis is the belief that the price of a trading instrument does not move randomly but follows a certain pattern. Investors can read and study price history like a book. From there, they can predict what will happen next.
In the cryptocurrency market, prices fluctuate due to changes in supply and demand. When supply exceeds demand, prices fall; when demand exceeds supply, prices rise. However, it is important to determine when that is and in which direction the price will move.
The main task of technical analysts is to assess the overall market context. At the same time, identify the exact points where prices are most likely to move.
Technical analysis is the most reliable and effective method of forecasting price movements. However, it requires the use of a number of tools and elements. For example, traders often use different charting tools. Such as indicators and candlestick charts, to analyze volume and liquidity.
See also: Technical analysis: secret trade to increase profits
Grasp the 3 main principles of technical analysis
Market Reflective Prices:
Price movements indicate the psychology of the crowd in the market.
- Phase 1: New investors entering the market often hope for big profits.
- Phase 2: As prices rise, optimism and euphoria prevail. This leads to the greatest financial risk as they continue to invest more money.
- Phase 3: When prices correct, investors become anxious and fearful. Finally, they panic and cut losses at all costs.
- Stage 4: After losing capital, investors become discouraged and lose confidence. However, this is the best stage of investing. This cycle will then repeat.
History tends to repeat itself:
Technical analysis is based on predicting potential future price movements by examining past price movements. Traders who follow this school believe that what has happened in the past will repeat itself in the future with a certain probability. Each specific type of technical indicator provides information for specific entry points.
Product prices fluctuate according to trendline:
Technical analysts believe that a product’s price will move in a trend: up, down, or sideways until a technical indicator shows a reversal.
How to learn crypto technical analysis?
You can start learning crypto technical analysis from easy to difficult according to the following sections:
Using TradingView: Learn how to use TradingView for analysis.
Basic knowledge of Japanese candlesticks:
- Basic Japanese Candlesticks
- Spinning Top Candle
- Hammer Candle
- Nến Inverted Hammer
- Shooting Star Candle
- Hanging Man Candle
- Bullish Engulfing Candlestick Pattern
- Bearish Engulfing Candlestick Pattern
- Evening Star Candlestick Pattern
- Morning Star Candlestick Pattern
Resistance and support:
- Resistance – Support
- 5 Ways to Identify Support and Resistance in Crypto
- 5 ways to determine take profit points
Main tools and technical models:
- Trendline
- Price channel model
- Moving Average (MA)
- Exponential moving average (EMA)
Technical indicators:
- MACD indicator
- RSI indicator
- Stochastic indicator
- DMI indicator
- KDJ Indicator
- MFI indicator
- Parabolic Sar Indicator
- Ichimoku indicator
- Volume Indicator
Price model:
- Double bottom, triple bottom model
- Wedge Model
- Triangle model
- Head and shoulders pattern
How traders can learn technical analysis effectively
The first step is to master the core concepts of Technical Analysis mentioned above. Including the applications to Defillama Chain. The foundational knowledge must be solid so that you can trade confidently and effectively.
Use the knowledge you have learned to perform backtesting on paper, checking the accuracy rate of each indicator. With modern technology, there are many tools to help you check the success rate of a strategy. Traders can also practice trading with a Demo account.
For example: On the Bingbon CFD platform, you can demo trade from crypto, and index to commodities.
Finally, learn to be flexible with your methods. Be principled but not rigid, and don’t just stick to one-way signals.
See more: Opening an Bybit exchange account for traders
The benefits of learning crypto technical analysis trading
Technical analysis helps traders make accurate predictions. Identify appropriate entry and exit points to increase profits and minimize risks. With a variety of indicators and analysis tools, traders can choose the tool that best suits their strategy.
Without having to spend too much time studying factors affecting prices like in fundamental analysis, technical analysis saves more time. Studying tools such as price patterns, candlestick patterns or technical indicators is easier thanks to their popularity and wide sources of information.
Conclude
Learning crypto technical analysis is almost an indispensable first step when entering investment. Because they are based on specific principles and can be trained to develop over time. Although the market is always dominated by “sharks,” basic technical analysis skills still bring you a high win rate and profit. Crypto Trading hopes that the above information will be useful to readers. Don’t forget to follow to update more interesting content!
Frequently Asked Questions
How to start learning and applying technical analysis to crypto trading?
Start by learning the basics. Then practice on charts and apply to real trading.
Can technical analysis be applied to short-term and long-term crypto trading?
Yes, technical analysis can be applied to both short-term and long-term crypto trading. In order to find trading opportunities and manage risk.
Technical Analysis vs Fundamental Analysis: Which One to Choose When Trading Crypto?
It depends on the trader. But often a combination of both methods will give the best results.
