Steemit Crypto Academy Contest / S4W1 - Crypto Market Technical Analysis by @jasminemary
Hello Steemians
edited with flyer maker
How are you doing today. I am glad to welcome you to my post today. Finally we are back to continue our engagement challenge contest which is the Season 4. All thanks to Steemit team for such an innovation that has unite a lot of us together. In this post, I have share about technical analysis in the crypto ecosystem.
How would you define Technical Analysis in the Crypto ecosystem? Mention its Importance.
Well in my own understanding, I would say that technical analysis in the crypto ecosystem is one of the key tools in the eyes of so many crypto traders, which helps them to study the market as to know if a cryptocurrency is actually moving up or down.
However, technical analysis isn't really deterministic when use in the crypto ecosystem. This is because technical analysis in the crypto ecosystem doesn't tell crypto trader the next thing that will definitely happen in the crypto market, instead it tell crypto traders what may likely happen to a certain historical information that has been analyzed from the study of a crypto charts.
With what I have said we can see that technical analysis in the crypto ecosystem is similar to the technical analysis in trading as a whole. So in a nutshell, Technical Analysis is simply the study of a certain cryptocurrency price movements by using a charts. A lot of crypto traders has benefits so much from the use of technical analysis even when cryptocurrency is experiencing a bearish trend.
Important of technical analysis:
One of the key important of technical analysis in the crypto ecosystem is that it helps crypto trader to accurately predict the highs and lows of a cryptocurrency prices over different time frames. With the predictions that is gotten from technical analysis, trader can be able to make sound decisions whenever they want to buy or sell cryptocurrency at a very profitable price.
Secondly, Technical Analysis can be used in both short and long term period which makes it more useful to traders and very important because its can also be used on any graph to predict future price movement.
Do you have practical knowledge of how to conduct technical analysis? Highlight some of the components of Technical analysis.
Yes I have practical knowledge of how to conduct technical analysis. As a crypto trader and also a consistent content writer in Steemit plaform, I have learned so much about how to conduct technical analysis which I have also put my learning into practice. However friend, in order to contact the technical analysis, you need to get use of the following guides below.
- Identify the market trend.
Friend, identifying of market trend is the first thing that you need to put in place when dealing with technical analysis because crypto trading can either move against market trend very fast. Identifying of market trend will help you to know whether the market is current in an uptrend, sideway or a downtrend trend move.
- Identify and dream the levels of support and resistance.
Friend, the levels of support and resistance, are the pint where the price of the assets that you have choose is likely to reverse back or form a breakout. The support level is the level where the downtrend price of the asset has pause which in turn causes buying pressure i.e buyers takes control. As for the resistance level,it is the level where the uptrend price of the traded asset fail to move further which then cause the price to fall downward.
Friend, the other things you need to know are;
Establishing your entry and exit points and knowing the size of your position to minimize your risk.
Key Components of Technical Analysis:
Technical Analysis, has a lot of components that I would love to discuss about. However, below are some of the key components of technical analysis.
- Price data and volume data
- Chart
- Tools and Indicators
Price data and volume data
The price data is one of the components of technical analysis, that involves the actual prices that a buyers and sellers have agreed on. Volume data is the components that show the numbers of assets that have been traded in a given time period.
Chart
The chart is the components of the technical analysis, that shows both the price and volume. In a nutshell, is a a summary data that shows the open price, high price and close price of an assets.
Tools and Indicators
Tools and Indicators help traders to be able to spot the level of overbought and oversold.
What do you understand by technical indicators? Do you consider them effective for trading cryptocurrency? Which one is your favorite and how does it work? (Screenshots required where necessary)
Technical indicators is what most traders often used to know the historical price of a cryptocurrency before they can predict the cryptocurrency. This means that Technical Indicators is simply a mathematical pattern that is gotten from past historical data that has been used by traders to predict the future movement of the price of a cryptocurrency. It involves a series of data starting from past price data, volume data and many others.
I consider some of the technical indicators effective for trading. However, relative strength index, moving average and moving average convergence divergence are the once that I consider the most.
My Favorite is Relative Strength index (RSI)
Relative strength index is known as a momentum indicator that is plot on a scale of 1 to 100. It is an indicator that show traders the level of overbought oversold of a traded assets. RSI works in this way; on a chart if the relative strength index (RSI) indicator line has moves below 30, it is an indication that market is experiencing a bearish. I.e the price of the asset is bearish which is cause by oversold.
However, in a situation when the relative strength index indicator has moves above 70, it is an indication that the market is currently experiencing bullish. I.e the price of the assets is bullish which is cause by overbought. Relative strength index signals are more efficient and very reliable to me most especially when it is combine with other indicator. Let's take a look at the screenshot below.
screenshot from Tradingview
From the screenshot above, the price of the traded assets has change it direction from the level of overbought to and oversold levels.
Highlight the advantages and disadvantages of technical analysis. What's your advice to anyone about it?
Advantages of Technical Analysis
One of the core advantage of technical analysis is that it is very easy to use and Identify the signs of a price trend of a traded asset in the market.
Secondly, technical indicator is a very common tools and very easy to use tool without stress.
Disadvantages of Technical Analysis
One of the core disadvantages of technical indicator is that there is sometime of element of market behavior that cannot be predicted so easily which makes it sometime unpredictable.
My advice to anyone about technical analysis
My advice to anyone about technical analysis is that you shouldn't depends on technical analysis along for your trading, instead you should also employ different indicators and technical analysis tools to support your trading so you can achieve success an equally minimize your risk.
I am inviting @yakspeace, @simonnwigwe and @preye2 to also take part in this contest.
Wow really understandable and educative article you have here,. It's true that technical analysis guides a trader to know when and how to place trade using the asset's chart. Nevertheless, it's important to note that the Crypto market can get very unpredictable and as such we need to check out 2 or more other indicators before we place trades.
Thank you so much for contributing to my post.
The RSI is indeed a good technical indictor. I liked the detailed explanation of how it works. It was a good read.
Thank you for stopping by dear.
I wanted to show RSI in my post as well but I opted for MA lines which work even better for me. In my opinion, RSI works best with MACD as they cancel out each other's lagging Signals.
Thank you so much for your time here friend.
You have made a valid point here by saying that technical analysis helps crypto traders to know the direction of the market trend and this is just the truth about it.
I wish you good luck on your jiurney.
This is great 🔥
Learnt something new on Technical analysis...
Thank you for your time here.
You are right but positional traders should also give due importance to fundamental analys .
You are right to dmsay that enret and exit points can be found . Position sizing is very important for traders as part of trader psychology because we tend to oversize often due to grees .
Good luck.
I'm glad that you stopped by here thank you so much.
Yeah this is true, technically analysis only tells the trader the next possibility of the market. The percentage of possibility depends on the traders knowledge and experience with technical analysis.
As the saying goes, trend is your friend, you identify trend and you can maximize you profit in no time. The outcome of every technical analysis is to identify trend.
I have use this indicator very often combined with Ichimoku cloud and MA cross. It’s a good indicator for identifying trend reversal, using the overbought and oversold regions.
Please find time to visit my post as well. Good luck!!
https://steemit.com/hive-108451/@sadiqxylo/steemit-crypto-academy-contest-season-4-week-1-crypto-market-technical-analysis-by-sadiqxylo
I am grateful that you stopped by.
Good evening friend,
This is awesomely true friend the use and implementation of technical analysis is not so difficult, as long as you were taught then you can use the technical analysis skill to make much more positive impact on your market predictions.
Thank you very much for sharing
wishing you success