How To Use Technical Analysis For Day Trading
Mastering Cryptocurrency Trading with Technical Analysis
The world of cryptocurrency trading is fast and unpredictable. With the rise of decentralized currencies such as Bitcoin, Ethereum and others, traders are constantly looking for new ways of gaining an advantage in this space. An effective technique used by traders to navigate the volatility of cryptocurrencies is technical analysis (TA). In this article, we will explore how to use technical indicators for a day trading on cryptocurrencies.
What is technical analysis?
Technical analysis is a method of assessing financial markets based on historical data and graphic models. It is a question of analyzing graphics to predict future price movements, rather than relying solely on a fundamental analysis or opinions based on feeling. Technical analysts examine various indicators, such as mobile averages, the relative force index (RSI) and Bollinger bands, to identify trends, support and resistance levels and potential purchase or sale signals.
How to use the technical analysis for a day trading on cryptocurrencies
- Choose a cartography platform : To use the technical analysis, you will need a reliable mapping platform that supports cryptocurrencies. Some popular options include TradingView, Metatrader 4 and CMC Markets.
- Select a pair of currencies : Identify the cryptocurrency pair (s) that you want to exchange. For example, if you look at Bitcoin (BTC / USD), you can use BTC / USD on your mapping platform.
- Open the graph : Open the table of the pair of chosen currencies and analyze it using technical indicators.
- Identify models : Look for models such as:
* Trends: long -term trends, such as increased trends or downward trends, which may indicate potential purchase or sale signals.
* Levels of support and resistance: Identify the levels where prices tend to bounce, indicating the potential areas of support or resistance.
* Indicators like RSI, Bollinger Bands and Moving Middle (MA): these indicators can help you assess the feeling of the market and predict price movements.
- Analyze the candles of the graphic : Study the candles of the graphic to identify:
* Optimistic or lowering candles: this indicates a potential tendency reversal.
* Damn inversion models: Look for models such as hammer, shooting star or inverted head and shoulders which may indicate a potential reversal of the trend.
- Use graphic tools : Use advanced mapping tools to analyze market data, such as:
* Volume analysis: This helps you understand the feeling of the market and price movements.
* Market feeling indicators: as the relative resistance index (RSI) or the stochastic oscillator, which can indicate market attitudes towards a particular asset.
- Make a negotiation decision : Depending on your analysis, make a negotiation decision using the chosen indicators and graphics models. You can use:
* Buy signals when prices exceed support levels or reach new heights.
* Sell signals when low prices below resistance levels or drop to reduce stockings.
Example: Bitcoin (BTC / USD) Technical analysis
Let’s analyze the BTC / USD pair on tradingView using certain technical indicators:
- Middle Mobiles : The 50 -day MA is $ 33,500 and the 200 -day MA is $ 32,000.
- Relative resistance index (RSI) : the RSI is currently at 70, indicating suroucan conditions.
- Bollinger Bands
: The upper group of Bollinger has reached a summit of $ 36,000 and is now below the lower strip.
Based on these indicators, we can identify:
- A potential tendency reversal when the price exceeds the 50 -day MA (purchase signal).
- Excessive conditions due to the reading of RSI out of 70.
- Lower candle models in the past few days, indicating a possible downward inversion.
Conclusion
Technical analysis provides a powerful tool for traders who seek to sail in the complex and unpredictable world of cryptocurrency trading.