How To Conduct Technical Analysis For Optimal Trading Decisions
How to carry out a technical analysis for optimal commercial decisions
The world of cryptographic currency is a high roles market that requires merchants to remain in front of the curve. One of the key factors for making informed information to trade is a technical analysis, which helps merchants identify patterns and trends in price movements. In this article, we will explore how to carry out a technical analysis for optimal commercial decisions.
What is a technical analysis?
The technical analysis (TA) is a method that merchants use for the analysis of financial markets, including cryptographic currency, using historical data and graphics. These include identifying patterns, trends and relationships between market data, such as prices, quantities and other indicators. Analyzing these data points, operators can make informed decisions about where to buy or sell properties.
Key concepts in technical analysis
Before immersing yourself in technical analysis, it is crucial to understand the key concepts that execute this methodology:
- Trending identification : Identification of the entire direction of the price movement.
- Level of support and resistance : Determination of areas where prices tend to reject or break.
- Mobile average
: Calculation of average price movements in different periods (for example, 50 days, 200 days).
- riders and configuration : Identify the possibility of buying or sales based on certain conditions.
Tools for technical analysis
To perform a technical analysis effectively, merchants need access to the right tools:
- Graphic software : Platforms such as TringView, Thinsorswim or Metatrader provide interactive tickets that allow merchants to visualize market data.
- Library indicators : Software suppliers such as quantopic, Zipline or tradestation offer a wide range of indicators built for several markets.
- Time series tools : Libraries such as Numpy and Pandas in Python allowed merchants to analyze data in time series.
How to carry out a technical analysis
Now that we have covered the basic concepts, we will immerse ourselves in some practical techniques:
- Identify trends : Look for clear trends on the ladder, using indicators such as the relative resistance index (RSI) or the storage oscillator.
- Analyze the level of support and resistance : Identify the key level of support and resistance to anticipate possible price movements.
- Look for samples : Use the mobile average, bollinger belts or other technical indicators to identify patterns in the price movement.
- Configuration : Determine the possibilities of buying or selling on the basis of specific conditions for the price or price range.
Example: How to perform a technical analysis to exchange crypto currency
Consider an example with the Bitcoin trade (BTC) in Binance Exchange:
- Graphic software : Use tradingView to visualize Bitcoin prices and identify trends.
- Indicators
: Establish the RSI indicator for the analysis of the price of prices and identifying exaggerated or overturned conditions.
- Level of support and resistance : Identify key support levels (for example, $ 6,000, $ 5,500) and resistance levels (for example, $ 10,000).
- Mobile average : Use a mobile average of 50 days and 200 days to identify the instructions of the trends.
Tips and best practices
To maximize your commercial decisions using technical analysis:
- Stay disciplined : Avoid emotional decision making based on short -term prices.
- Continuous monitor : Check the tickets regularly and indicators to update your analysis.
- Use more tools : Combine different technical indicators and types of graphics for a complete account.
- Follow fundamental factors : Do not trust technical analysis; Consider the general conditions of the market, news and economic data.
Conclusion
Technical analysis is a powerful tool for merchants who make informed decisions in the world of cryptocurrency trade.