An Introduction To Cryptocurrency Technical Analysis

Cryptocurrency Technical Analysis


You need to do a lot of research and analysis before making an investment decision. Whether you are investing in real estate or cryptocurrencies, you need to be aware of two investment decision-making methods. In fundamental analysis, the analyst analyzes the financial statements of the company’s fair value determination. In technical analysis, the analyst analyzes to understand price patterns and trends. 

This article covers technical analysis in cryptocurrencies. You can use this method to analyze crypto Bitcoin and other cryptocurrencies. This method collects price and other data to study statistical trends. It is used for an asset’s strength and weakness evaluation. You can observe trading signals, price movement patterns and so on. You can use this method to analyze forex, crypto coin market analysis, stocks and commodities. 

This method uses a prices and volume chart representing decisions taken by buyers and sellers in the past. You and other participants can use this information to make decisions. This affects your decision making in two ways including psychological and reflexive.   


When the price of a cryptocurrency or any other asset declines, you are likely to focus on the price at which you purchased it. You will sell the cryptocurrency or asset when the price reaches break-even. 


The decision is based on common trends and chart patterns. 


There are three possible trends including uptrend, downtrend and sideways trend. When the asset goes up making higher lows and higher highs, it is uptrend. When the asset goes down making lower lows and lower highs, it is downtrend. An asset trading in a horizontal channel represents a sideways trend. The terms “Bullish” and “Bearish” are also very common. Bullish strikes upwards, that is prices go higher. Bearish strikes downwards that is prices drive down.

Resistance and Support 

Resistance is the low level the price reaches and support is the high level the price reaches over time. 

Open-High-Low-Close Charts

OHLC charts display ‘candlesticks’. Depending on the relationship between the low, high, opening and closing prices of the day, the shape of the candlestick varies. The close in bullish candle is above the opening. The close in bearish is below the opening. 

Japanese were the first to use this technique to track rice prices in the 1700s. You can study individual candlestick. However, these are often studied in groups. 

Simple Moving Average 

It is a stock’s average closing price. 

Simple moving average

It is calculated by dividing the sum of recent prices by the number of time periods. 

MACD (Moving Average Convergence Divergence) 

It is a momentum oscillator used for trading trends. It looks at the combination of a long-term and short-term moving average. The combination of moving averages identifies the current trend. It also identifies a momentum change. 

Effects of News on Asset Prices

Media has a significant influence on the public. News can cause fear and panic. Whether you want to analyze crypto bitcoin or real estate, you always need to stay up-to-date. For example, the price of a crypto coin is likely to collapse if it is banned by a country.

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