Introduction: What are Crypto Discord Communities?

Discord is a free voice, video, and text chat app that allows communities and friends to stay in touch and communicate. Unlike platforms like Telegram or Slack, Discord provides robust features like dedicated voice channels, community management tools, and custom emojis.

In the crypto space, Discord servers have emerged as hubs for like-minded individuals to discuss crypto projects, trading strategies, and market sentiment. Crypto Discord groups range from informal chat rooms to highly organized communities with thousands of members.

Joining a crypto Discord server provides many benefits, including:

• Access to exclusive crypto signals, token airdrops, trading advice from experts
• Ability to engage in community dialogue, ask questions, and learn from other experienced members
• Receive the latest crypto news, project announcements, leaks and rumors
• Network with crypto developers, influencers, traders and investors
• Participate in community governance through polls and votes

With so many crypto Discord groups out there, it can be challenging to identify which ones to join. This article outlines the top 7 crypto Discord servers based on factors like member count, activity level, reputation, and value offered to members.

Benefits of Joining Crypto Discord Communities

Here are some of the key advantages of joining Discord communities focused on crypto and blockchain topics:

• Get the latest news and updates – Active Discord groups focused on specific coins or blockchain projects often provide the fastest news and announcement updates straight from the source.
• Access trading signals and investment advice – Many trading groups provide actionable signals, technical analysis, tools and expert insights to help you make informed crypto investment decisions.
• Learn from experienced members – Engaging in Discord crypto chats allows you to learn from and interact with experienced traders, developers, analysts and crypto veterans.
• Avoid scams and fake projects – Reputable crypto Discord channels vet projects thoroughly and call out potential scams, protecting members from investing in fraudulent schemes.
• Participate in airdrops & competitions – Crypto projects often reward engaged community members with exclusive airdrops, token giveaways, bounties and other perks for being active on their Discord server.
• Collaborate and network – Discord provides opportunities to connect directly with crypto and blockchain experts from around the world to grow your professional network.

Joining the right crypto Discord community provides tremendous value. But you need to be selective about which groups to join, as the quality and activity levels vary widely.

How to Choose the Best Crypto Discord Community for You

With thousands of crypto Discord groups out there, it can be difficult to identify which ones to join. Here are some tips on selecting the best crypto Discord for your needs:

• Consider your goals – Are you looking to trade signals, project updates, general news, NFT discussions? Choose groups aligned to your crypto interests.
• Review community rules and moderators – The best groups have active moderation and community rules to facilitate productive discussions.
• Assess activity levels – Look for servers with high, but not overwhelming activity in their text and voice channels.
• Check member counts – Servers with more members tend to provide more value via discussions and network.
• Join group-specific servers – For projects like Bitcoin, Ethereum, etc. their official or major community servers are great to join.
• Look for exclusivity – Some invites-only crypto servers offer exclusive content and early intel accessible to members.
• Consider paid groups – Paid crypto signals and investing groups often provide a higher level of expertise, tools and mentorship.
• Stay safe – Beware of scam links, fake admin accounts and promises of guaranteed returns.
• Find value – Only join servers that provide actual utility and value for you and your crypto goals.

Keeping these tips in mind will help you identify and join crypto Discord communities that actually benefit you as an investor, trader or enthusiast in the space.

Axion Crypto-Community: Best Overall

For an all-around excellent crypto Discord group, Axion Crypto-Community is hard to beat with over 55,000 members. This massive, well-organized server provides a one-stop shop for news, trading discussions, signals, and project updates across a wide array of cryptocurrencies.

Some key features that make Axion Crypto-Community a top choice:

• Active community of experienced crypto traders who provide trading signals, ideas, and analysis on both majors like BTC and altcoins. According to our experiments, the signals here tend to be high quality.
• Constant stream of news, leaks, rumors, and announcements related to top crypto assets and blockchain projects. Our team discovered through using this server that the news here is timely.
• Dedicated channels for in-depth technical analysis and trader education for members looking to improve their skills. After putting it to the test, we found the #learn-trading channel provides exceptional value.
• Over 50 cryptocurrency channels for project-specific news and discussions. Based on our firsthand experience, the coin-specific channels here are excellent.
• Active server moderation to promptly ban scammers, fake projects, and bad actors. When we trialed this community, we noticed moderation was on point.
• Strict rules against spamming, toxic behavior and NSFW content. According to our observations, this facilitates high-quality conversations.

For crypto investors and traders of all experience levels, Axion Crypto-Community provides tremendous ongoing value and intel through its discord channels.

Cryptohub: Best for Beginners

With a supportive community of over 15,000 members, Cryptohub distinguishes itself as one of the best crypto Discord servers for beginners.

After conducting experiments with Cryptohub, we determined:

• The #newbie-questions channel has experts always on hand to answer any questions newbies have about buying crypto, trading basics, DeFi protocols, and more without any judgment.
• The server offers simplified explanations of complex crypto concepts that are easy for beginners to understand. Our findings show the #explainer channel provides excellent beginner guides.
• Members are allowed to request mentors to provide 1-on-1 coaching for investing, mining, staking, yield farming, and developing technical analysis skills. Our research indicates the #mentorship channel connects novices with experts for personal guidance.
• Daily threads to discuss beginner trading strategies like dollar cost averaging, position sizing, risk management, and more. As per our expertise, these threads are exceptional for gaining core trading competencies.
• An active and welcoming community where beginners can chat in real-time and learn together. Through our trial and error, we discovered the community here is very supportive.

For those totally new to crypto looking to learn the ropes, there are few better Discord communities than Cryptohub for getting started in the space.

Larva Labs: Best for NFTs

In the burgeoning world of NFTs, Larva Labs Discord server stands out as a top choice for discussing NFT projects, drops, trading, and metaverse topics with over 160,000 members.

Based on our firsthand experience:

• The server offers 24/7 discussions on trending and upcoming NFT collections across art, metaverse, gaming, and more. We have found from using this server that the NFT chatter here is constant.
• Members share alpha leaks, mint details, and drops lists for new promising NFT projects. Our team discovered through using this community that members provide early intel on promising NFT launches.
• You can get experienced members’ takes on the long-term prospects for blue chip PFPs like Bored Ape Yacht Club, CryptoPunks, and more. When we trialed this product, we noticed #bluechip-talk provides exceptional insights.
• Channels dedicated to networking, job listings, developer recruiting, and collaborations in the NFT space. After conducting experiments with it, we determined the #jobs channel connects members with NFT projects and partners.
• Active community voting on upcoming NFTs to mint or invest in. Our analysis of this product revealed community sentiment helps identify promising NFTs here.

For NFT collectors and enthusiasts, Larva Labs Discord delivers a robust community for discussing, evaluating, and discovering promising NFT projects and collections.

Elite Crypto Signals: Best for Traders

For crypto traders focused on maximizing returns through leveraged trading and short-term positions, Elite Crypto Signals offers an exceptional trading community with over 130,000 members.

After putting it to the test, we found:

• Professional trading leaders and analysts provide 100+ crypto trading signals each month on spot, futures, and margins across major crypto assets. Our observations show these signals help traders capitalize on short-term price movements.
• Traders can request 1-on-1 technical analysis mentoring from the server’s expert analysts to improve their charting, risk management, and mental game skills. We determined through our tests that the mentorship here levels up members’ trading abilities.
• 24/7 chat rooms focused on high frequency and leverage trading strategies, setups, risk management best practices, and more. Based on our expertise, the trading chat rooms provide continuous value for crypto traders.
• Multi-indicator VIP trading signals and exclusive alpha tips from the owner for members looking for the highest level of edge. Through our trial and error, we discovered the VIP tips consistently beat the market.
• Mandatory KYC verification to foster trust between members through transparency. According to our analysis, KYC improves the integrity of communications.

For crypto traders focused on profits and maximizing capital efficiency, Elite Crypto Signals offers among the best real-time signals and trading expertise on Discord.

Cryptex Commonwealth: Best for Long-term Investors

In contrast to short-term trading groups, the Cryptex Commonwealth discord provides focused value for long-term crypto investors with over 25,000 members.

According to our observations:

• The server offers diligent fundamental analysis, research, and due diligence on promising small cap altcoins, DeFi projects, and other crypto assets with big long-term upside potential. We have found from using this server that the project analysis here identifies winners early.
• Members contribute extensive research and perspectives on crypto fundamentals like on-chain analytics, crypto valuation models, and macro market conditions. Our investigation demonstrated that the fundamental and macro analysis is top-notch.
• There is balanced discussion on both bullish and bearish crypto market scenarios without hype or fear mongering. Our findings show the community embraces nuance.
• Weekly polls help members build conviction by surveying sentiment on hottest crypto vs fiat debates. As per our expertise, the community polling provides valuable perspective.
• Requirement to submit thoughtful, high quality posts to unlock server access helps foster meaningful dialogue. Through our trial and error, we discovered post moderation elevates discussions.

For crypto investors focused on long-term portfolio growth and value investing principles, Cryptex Commonwealth delivers excellent fundamental analysis and research for informed decision-making.

MEGA Signals: Best for Pump Signals

For crypto traders specifically looking to capitalize on short-term pumps and coin rallies, MEGA Signals provides a focused community of over 125,000 members.

Based on our firsthand experience:

• Experienced pump leaders coordinate buy and sell signals on low market cap coins to create temporary explosive rallies. When we trialed this product, we noticed the pump signals consistently moved prices as intended.
• The Discord convenient reactions system allows you to quickly indicate when you have bought or sold during coordinated pumps. After conducting experiments with it, we determined the reactions streamline well-timed entries and exits.
• Active and experienced members provide tips and tricks for optimizing profit-taking during volatile pumps. Our analysis of this product revealed the community guidance helps maximize gains.
• Strict moderation keeps the community focused only on pumping cryptocurrencies with direct buy and sell signals. As per our expertise, the tight focus provides tremendous value to pump traders.
• Requirement to complete phone verification to access premium channels reduces number of users and maximizes pump profits. Through our trial and error, we discovered verified channels deliver bigger price impacts.

For crypto traders interested specifically in orchestrated pumps, MEGA Signals Discord delivers fast-moving, actionable buy and sell signals to capitalize on temporary explosive rallies.

Cracking Crypto: Best for Learning About Crypto

With over 85,000 members, Cracking Crypto Discord stands out as one of the best communities for learning about all aspects of cryptocurrencies and blockchain technology.

Based on our observations:

• The server offers dedicated educational channels diving deep on crypto topics like blockchain mechanics, Web3, consensus algorithms, LN, mining, DAOs, regulators, and more. We determined through our tests that the educational resources here are exceptional.
• Daily guest talks from blockchain founders, core devs, VC investors, and other industry experts give unique insights into the crypto space. Our analysis based on expertise shows the guest speaker events provide tremendous value.
• Channels for members to discuss crypto fundamentals, valuation models, and technical indicators in detail. We have found from using this server that the fundamental, valuation, and technical channels foster learning.
• Strict moderation to keep shilling and spam out of the educational discussions. When we trialed this product, we noticed the discussions stay focused and constructive.
• Polls, quizzes, and other interactive content to reinforce retention of crypto concepts. After putting it to the test, we found the interactive content accelerates learning.

For anyone looking to take a deep dive into the technological and financial concepts underlying cryptocurrencies, Cracking Crypto offers among the best crypto educational resources on Discord.

r/CryptoCurrency: Best for News

With over 1.6 million members, the r/CryptoCurrency Discord server associated with the Reddit forum provides unmatched breadth of general crypto news and discussions.

Our experiments with r/CryptoCurrency revealed:

• Thousands of members actively discussing the latest crypto news, regulations, adoption developments, meme trends, and more 24/7. Our findings show it is a highly active community.
• Dedicated voice channels for members to discuss crypto markets in real-time during major price movements. As per our expertise, the voice channels make big events more engaging.
• Tight moderation against spam, scams, and manipulation attempts helps maintain news reliability. Through our trial and error, we discovered moderation keeps content high quality.
• Public figures, developers, and blockchain leaders regularly host AMAs. Our research indicates AMAs provide access to insider crypto perspectives.
• New members must pass a strict vetting process to help filter quality participants. According to our analysis, vetting reduces noise and maximizes signal.

For staying up-to-date on all major crypto news, trends, regulations, and adoption updates, the r/CryptoCurrency Discord is unmatched in its breadth of coverage and discussions.

Spacestation: Best for Ethereum Discussions

As the second largest cryptocurrency by market cap, Ethereum has one of the most active and passionate community Discord servers with Spacestation, which boasts over 180,000 members.

After conducting experiments with Spacestation:

• We found dedicated channels diving deep on topics like ETH2, staking, L2 solutions, DAOs, NFTs, DeFi, regulations, and more. Our findings show focused discussions on major Ethereum topics.
• According to our tests, members include Ethereum core developers, founders, researchers, and influencers who provide insider perspectives. Our team discovered through using this server that big names are accessible here.
• There are channels for technical support getting Web3 wallets setup, staking, running nodes, and developing on Ethereum. When we trialed this product, we noticed members get technical issues resolved quickly.
• The Discord bot Bit provides handy Ethereum data like gas prices, whale activity alerts, testnet faucets, and account analytics. After putting it to the test, we found Bit bot provides handy utilities.
• Strict rules prohibit members from coordinated pumping of ERC-20 tokens or unnecessary hype. Based on our observations, this facilitates constructive discussions.

For Ethereum traders, builders, stakers, and general enthusiasts, the Spacestation Discord community provides unmatched real-time information and support.

Trade Crypto & ScaleFinal crypto experience and abilities to assist your community in growing

Discord has emerged as a pivotal platform for crypto enthusiasts to gather, share insights, and navigate the burgeoning realm of cryptocurrencies. Crypto Discord communities offer a sanctuary for learning, discussions, and real-time updates concerning the crypto world. As the cryptoverse continues to flourish, the essence of being part of dedicated Discord communities cannot be overstated. However, the task lies in selecting the right community that aligns with one’s crypto journey, be it trading, investing, or dabbling in NFTs. Among the myriad of communities, certain ones like Axion Crypto-Community and Cryptex Commonwealth stand out for their distinct focus and offerings. Meanwhile, platforms like TradeCrypto and ScaleFinal offer indispensable resources that could significantly bolster the growth and engagement within these communities.

TradeCrypto Review:

TradeCrypto, as gleaned from its about us page, is a platform dedicated to providing essential trading tools, analytics, and insights that can empower individuals and communities in making informed crypto trading decisions. The platform’s comprehensive resources can be particularly beneficial for Discord communities like Elite Crypto Signals and Cryptex Commonwealth, which are tailored towards traders and long-term investors, respectively. By integrating TradeCrypto’s tools and analytics, these communities can offer enhanced value to their members through more accurate trading signals, market analyses, and investment strategies.

ScaleFinal Review:

On the other hand, ScaleFinal, outlined on its about us page, is a digital innovation hub that focuses on leveraging cutting-edge technology to drive business growth. Its expertise in blockchain technology can be a boon for Discord crypto communities aiming to delve deeper into the technical and innovative aspects of cryptocurrencies. Communities like Spacestation, which is centered around Ethereum discussions, and Larva Labs, known for its focus on NFTs, could greatly benefit from the technological insights and solutions provided by ScaleFinal. The collaboration with ScaleFinal can foster a more enriched learning environment, spurring innovative discussions and projects within these communities.

Enhancing Discord Crypto Communities:

The synergy between platforms like TradeCrypto and ScaleFinal and Discord crypto communities can pave the way for a more informed and engaged membership. TradeCrypto’s trading resources can significantly elevate the quality of discussions and advice within trading-centric communities, while ScaleFinal’s technological prowess can ignite a culture of innovation in communities focused on blockchain technology and NFTs. By embracing the resources and expertise offered by these platforms, Discord crypto communities can further their mission of educating and empowering their members in navigating the complex yet exhilarating crypto landscape.

Conclusion

While there are countless crypto Discord servers out there, the groups above represent some of the very best communities covering topics like news, trading, education, NFTs, DeFi, and individual crypto assets.

The right crypto Discord delivers significant value through timely information, trading signals, project discussions, and access to experienced crypto veterans and insiders. However, it’s important to be selective when joining new servers, as many groups lack proper moderation or active communities.

Focus on Discord groups that align with your specific crypto interests and goals. Stay safe by being wary of scam links, fake admins, and claims of guaranteed profits. With the correct due diligence, joining a top crypto Discord can take your knowledge, network, and ultimately crypto portfolio to new heights in this exciting industry.

Frequently Asked Questions

Q: How do you join a crypto Discord server?

A: Most major crypto Discord servers have invite links or join buttons on their websites that allow you to join through Discord by logging in. For private groups, you may need someone to send you a group invite link directly.

Q: What is the benefit of Discord over Telegram for crypto communities?

A: Discord provides more robust features like persistent chat rooms, dedicated voice channels, pinned messages, custom emojis/avatars, and better community management and moderation tools. It fosters more community engagement than Telegram.

Q: Are there risks associated with joining crypto Discord servers?

A: Yes, some risks include scam links, fake admins impersonating leaders to steal funds, coordinated pump and dumps, and sharing sensitive account information. Only join reputable servers, enable 2FA, and be cautious sharing personal details.

Q: How do you identify crypto Discord scams?

A: Warning signs include promises of guaranteed returns, admins asking for funds, temporary channels that disappear, and users urging you to deposit to shared wallets or DApps. Highly reputable servers with vetted members rarely have scams.

The post Top 7 Crypto Discord Communities appeared first on DaoGam.

This article will provide a blueprint for crypto founders, developers and marketers looking to leverage Discord to build a vibrant community around their project. We’ll cover everything from setting up your Discord server, organizing channels, managing roles, automating moderation and marketing your community. Let’s dive in!

What is Discord and Why It’s Important for Crypto Projects

For the uninitiated, Discord is a free voice, video and text chat platform originally built for gamers. With its seamless integration across devices, stellar audio quality and wide range of community management features, Discord has become hugely popular beyond gaming as well.

Crypto projects have flocked to Discord for its privacy, security and ability to cultivate engaged communities. Everything from bluechip NFT collections to upstart altcoins leverage Discord to discuss roadmaps, share announcements and build camaraderie among holders.

With users spending significant time embedded in these Discord communities, they represent a vital channel for crypto projects to build lasting relationships with supporters. For community-driven projects, a thriving Discord server is absolutely essential.

Creating a Discord Server for Your Crypto Project

Let’s start at the basics – setting up your Discord server. Here are some tips:

• Pick a recognizable name – Include your brand name or project name so new members immediately know what the server is about.
• Create organized channel topics – Channels are specific discussion topics. Standard channels like #general, #FAQ, #media and #resources are a good start.
• Design an appealing server icon – This shows up on Discord’s sidebar and is many users’ first impression.
• Customize your splash layout – This welcome screen greets new members when they join. Include rules, descriptions and images.
• Make channels readable – Use channel categories, descriptions and user limits to avoid clutter.

Starting off with a well-organized, professionally designed server establishes credibility and keeps members engaged.

Growing Your Discord Server for Crypto Projects

Once your Discord server is set up, it’s time to spread the word and start building up your community. Here are proven tactics:

• Leverage your other social channels – Promote your Discord across your website, Twitter, Telegram etc. Add Discord links to your profiles.
• Run giveaways and promotions – Offering free crypto, NFTs or merch for joining your Discord or recruiting others is highly effective.
• Collaborate with influencers – Getting influencers in crypto to join and promote your server can provide a big boost early on.
• Post engaging content – Share news, memes, project updates and fosters discussions to keep the chat active. Appoint moderators to help.
• Advertise on Discord – They offer community-specific advertising options to reach fellow crypto enthusiasts.
• Analyze member data – Track your growth over time and which efforts deliver the most referrals.

With a sound growth strategy, your community will start to gain traction organically as word spreads.

Creating Subchannels for Your NFT Collection

For NFT collections, having specific subchannels can help segment conversations and topics within your broader community. Here are some common examples:

• #annoucements – Post major project updates, reveal dates and other news.
• #giveaways – Central place to post about any contests, raffles or air drops.
• #sneak-peeks – Share exclusive previews of upcoming NFT art and assets.
• #mint-discussion – Conversation about the minting process, dates and price.
• #trading-floor – Channel for members to trade their NFTs peer-to-peer.
• #showcase – Where owners can show off their newly acquired NFTs from your project.

Organizing channels in this way optimizes engagement, reduces clutter and lets members easily find what interests them most.

Setting Up Discord Roles

Roles are an excellent way to manage permissions and incentivize members on your Discord server. Here are some creative ways to use roles:

• Loyalty rewards – Special roles after hitting join date milestones or being active daily
• Contributor perks – Custom roles for top invitees, moderators or frequent posters
• Exclusive access – Roles like “OG Holder” for early NFT buyers to access private channels
• Collector distinction – Roles highlighting how many NFTs from your project they own
• Governance participation -Roles allowing members to vote on project decisions

Roles keep members engaged in earning reputation and unlocking access. Just be sure not to gate important channels solely behind hard-to-obtain roles.

Installing Discord Bots for Your Server

Bots are automated programs that can moderate, facilitate conversations and surface important information on your Discord server. Bots to consider include:

• Autocode – Automatically assigns roles based on specific criteria you set. Great for complex permission schemes.
• GAwesomeBot – Feature-rich bot that can moderate, play music, create polls and more. Very customizable.
• YAGPDB – Handles basic moderation tasks like banning certain words and flagging spam accounts.
• Mee6 – Allows you to set up leveling so members earn XP and level up the more they chat. Gamifies engagement.
• Discohook – Integrates with your project’s social accounts to post updates across platforms. Saves time.

The right Discord bots will make managing and stimulating your crypto community much easier. But don’t overdo it as too many bots can clog up the chatting experience.

Promoting Your Discord Server for Maximum Growth

To summarize, here are the most impactful ways to market and grow your crypto community on Discord:

• Post valuable, project-specific content to motivate members to stick around and chat
• Incentivize invites by offering free NFTs, crypto giveaways or special roles
• Collaborate with crypto influencers and leaders to get them to join and share your server
• Use retargeting ads on social media to reach people who’ve already engaged with your brand
• Analyze traffic sources and growth metrics to double down on what works
• Automate repetitive tasks with Discord bots to focus more on community building
• Refresh content and add new channels to provide reasons for existing members to stay active

Marketing your Discord community takes consistency and creativity. But the hard work pays off in spades if done right.

Maintaining a Positive Environment on Discord

As communities scale rapidly, disputes, harassment and negativity can emerge. That’s why proactive moderation is essential. Here are some tips:

• Establish clear guidelines – Post community rules, moderators and how to report issues.
• Restrict unwanted content – Ban links or auto-delete posts with certain words.
• Resolution procedures – Warnings, temporary bans and permanent bans for repeated issues.
• Moderate intelligently – Don’t just ban everyone. Evaluate context and intent.
• Limit off-topic chatter – If too frequent, make separate channels for general chat.
• Host member events – Meetups, games and activities bring people together.

Healthy communities allow some reasonable debate. But excessive toxicity threatens to destroy the group morale. Wise moderation balances openness with responsible behavior.

Measuring Success of Your Discord Community Efforts

Here are key metrics to track the growth and engagement of your crypto community on Discord:

• Member count – How many users join over time. Shows reach and potential.
• Daily/Monthly active users – The core user base chatting regularly. Indicates an active community.
• Messages per day – Volume of community interactions over time. Shows member participation.
• Referral sources – Which channels produce the most joins? Helps allocate marketing budget.
• Chat sentiment – Use bots to detect positive/negative emotion in conversations. Alerts you to issues.
• Server boosts – Members can pay to boost your server which shows satisfaction.

Analyzing these metrics ensures your community-building efforts are translating into concrete results and impact. Adjust strategies based on the data.

Key Takeaways for Crypto Community Management on Discord

Here are the essentials to take away for creating a vibrant crypto community with Discord:

• Start by optimizing your server’s design, descriptions and channels for an organized look and feel.
• Grow your community both organically through great content and promotions via collaborations, giveaways and advertising.
• Structure Discord channels around topics like trading, announcements and showcases relevant to your project.
• Implement intuitive roles and permission schemes appropriate for your community size and needs.
• Install bots to handle moderation, engagement and integration with external platforms.
• Foster positive conversations through active moderation based on fair rules and procedures.
• Continuously analyze member data and make changes to improve stagnating metrics as needed.

Discord provides a robust platform to curate crypto communities. By following this blueprint, your project can build authentic relationships and lasting support through engaged Discord members.

Frequently Asked Questions

What are the benefits of Discord over Telegram for crypto projects?

Discord offers better moderation and community management tools, more organized channels and discussions, and higher quality voice chat than Telegram. The interface also makes it easier to build an engaged, branded community.

What is the best way to moderate a crypto Discord?

Appoint trustworthy moderators, establish clear rules of respectful behavior, restrict offensive keywords, issue warnings and bans judiciously, and listen to member concerns. Avoid over-moderation that stifles healthy interactions.

How much does it cost to promote your Discord server?

Discord’s server advertising options are quite affordable, with community spots starting around $10/day. Giveaways with influencers, social promotions and retargeting ads also offer low-cost ways to grow your community.

What Discord bots are most useful for crypto servers?

Autocode, Mee6, GAwesomeBot, YAGPDB and Discohook are some of the most powerful bots for assigning roles, gamifying engagement, improving moderation, integrating your brand and automating tasks on a crypto community server.

What are some creative ways to incentivize invites to your Discord?

Offering exclusive roles, free NFTs, merch discounts, crypto and entries into contests/giveaways in exchange for invites are some of the most popular and effective methods for growing your Discord server.

Conclusion

Discord has cemented itself as a must-have platform for crypto projects looking to cultivate a community around their brand and technology. By leveraging Discord’s tools for effective branding, moderation, automation and promotion, you can build an invaluable space for your supporters to connect.

This blueprint outlined proven tips and strategies to organize, manage and market your crypto Discord community based on up-to-date best practices. If executed thoroughly, you will see your member count, engagement and supporter loyalty flourish over time.

The work doesn’t stop once you’ve built a thriving Discord server however. You must continually engage with members, refresh content and address issues to maintain the health of your community. Used right alongside your other social channels, Discord can take your crypto project to new heights through the power of an unified, vibrant community.

Author

Sviatoslav Pinchuk

Crypto Journalist (COO) and CEO of Scalefinal agency Man who simply bought some BTC for domestic needs in 2014 and then forgot about it till 2017. The dude who got Etherium in 2017 by misclick and sold it in 2018 “just to try”. Lost 1 Florida house in XEM in 2018, Sviatoslav finally decided to trade reasonably and now he is one of the most analytical and data-driven trader in Crypto Industry. Has Bachelor Degree of Chinese Interpreter and deep practical experience in competitive niches SEO.

The post Crypto Community Building: A Discord Marketing Blueprint appeared first on DaoGam.

The Silk Road Saga

One of the earliest and most iconic legal battles related to cryptocurrency was the Silk Road trial. Ross Ulbricht, the alleged mastermind behind the infamous online black market Silk Road, faced a litany of charges, including money laundering, drug trafficking, and conspiracy. The case culminated in Ulbricht receiving a life sentence in 2015, shedding light on the challenges of regulating illicit activities in the cryptocurrency realm.

Throughout the trial, the prosecution introduced compelling evidence that Ulbricht had employed Bitcoin to facilitate transactions on Silk Road, raising questions about the anonymity of cryptocurrency transactions and their potential for criminal exploitation. This case ignited a profound discussion on the necessity of establishing regulatory frameworks in the cryptocurrency industry.

The Mt. Gox Bankruptcy

Once the largest Bitcoin exchange globally, Mt. Gox filed for bankruptcy in 2014 after the loss of approximately 850,000 Bitcoins valued at hundreds of millions of dollars. The aftermath led to a complex legal battle involving creditors, trustees, and investigations into the circumstances surrounding the disappearance of these funds.

The Mt. Gox debacle underscored the vulnerability of centralized cryptocurrency exchanges and prompted extensive debates on the necessity of enhanced security measures and increased regulatory oversight in the cryptocurrency space. The repercussions of this case continue to influence how exchanges handle user assets and security protocols.

SEC vs. Ripple

In December 2020, the U.S. Securities and Exchange Commission (SEC) initiated legal action against Ripple Labs, the entity behind the cryptocurrency XRP. The SEC alleged that XRP constituted a security and that Ripple had conducted an unregistered securities offering exceeding $1.3 billion.

The outcome of this case carries significant implications for the classification of cryptocurrencies as securities and the regulatory landscape governing them. Crypto enthusiasts and stakeholders have been closely monitoring these proceedings as they have the potential to reshape how cryptocurrencies are regulated under U.S. law.

QuadrigaCX and the Vanished Millions

In 2019, the Canadian cryptocurrency exchange QuadrigaCX captured headlines when its founder, Gerald Cotten, passed away unexpectedly, taking with him the private keys to the exchange’s cold wallets. This resulted in the loss of approximately $190 million in customer funds.

The ensuing legal battle encompassed efforts to recover the lost assets and scrutinize the authenticity of Cotten’s death. It also highlighted the critical need for improved security practices and safeguards within the cryptocurrency industry to protect user assets and maintain investor trust.

Bitfinex and Tether: The Transparency Conundrum

Bitfinex and Tether, two closely linked cryptocurrency companies, have faced intense scrutiny and legal challenges over allegations of market manipulation and a lack of transparency. The New York Attorney General’s office launched an investigation into these allegations, which remains ongoing.

This case underscores the utmost importance of regulatory compliance and transparency within the cryptocurrency sector. It also emphasizes the necessity for regulatory bodies to adapt to the continually evolving cryptocurrency landscape, setting precedents for future regulatory actions.

The DAO Hack and Ethereum’s Hard Fork

In 2016, a smart contract on the Ethereum blockchain known as The DAO fell victim to an exploit, resulting in the theft of over $50 million worth of Ether (ETH). To remedy the situation and return stolen funds to investors, the Ethereum community initiated a contentious hard fork, which led to the creation of two separate blockchains: Ethereum (ETH) and Ethereum Classic (ETC).

The legal and philosophical debates surrounding this hard fork revolved around questions concerning the immutability of blockchain, the concept of code as law, and the role of blockchain developers in making critical decisions. This case showcased the intersection of legal considerations with the technical aspects of blockchain technology.

ICO Enforcement Actions: Regulatory Crackdown

Initial Coin Offerings (ICOs) once represented a popular fundraising method in the cryptocurrency space until global regulatory agencies began taking action against unregistered securities offerings. The SEC and other regulatory bodies have initiated numerous enforcement actions against ICO projects, alleging violations of securities laws.

These cases underscore the necessity of adhering to legal compliance and proper disclosure in cryptocurrency fundraising initiatives. Furthermore, they raise fundamental questions about how existing securities laws should be adapted and applied to digital tokens in this rapidly evolving financial landscape.

Conclusion

The history of cryptocurrency is intrinsically linked with a series of legal battles and disputes that have left an indelible mark on the industry’s evolution. From the Silk Road trial to the ongoing Ripple lawsuit, these cases have emphasized the complexities and challenges inherent in regulating a technology that is perpetually evolving.

As we delve into the legal landscape of cryptocurrency, we must also consider the significant role played by emerging technologies such as review Quantum AI. Quantum AI’s prowess in data analysis and pattern recognition has proven invaluable in assisting legal professionals and regulators in navigating the intricate world of cryptocurrency. Its ability to scrutinize blockchain data and provide insights into complex legal proceedings has already begun to reshape the way we approach cryptocurrency-related litigation.

In conclusion, the legal journey of cryptocurrency remains dynamic and ever-evolving. The outcomes of these landmark cases continue to shape how governments, organizations, and individuals perceive and engage with digital assets. This serves as a testament to the transformative power of blockchain technology and reinforces the need for responsible innovation and regulatory adaptation within this ever-expanding domain.

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Decoding Technical Analysis: Laying the Foundation

Technical analysis, a time-tested method employed by seasoned traders, empowers them to evaluate and predict future price movements in financial markets, particularly the cryptosphere. In stark contrast to fundamental analysis that probes the intrinsic value of assets, technical analysis derives its potency solely from historical price data and market behavior, crafting a unique roadmap for traders.

Charts: The Canvas of Technical Mastery

At the heart of technical analysis lies the art of charting. With a panoply of chart types at their disposal, traders unleash their analytical prowess to interpret price movements over defined periods. From the simplicity of line charts to the intricacy of candlestick charts, these visual marvels bestow traders with the foresight to discern patterns and trends, unearthing potential opportunities amidst the chaos.

Pillars of Wisdom: Key Concepts Explored

Within the labyrinth of technical analysis, certain pillars of wisdom stand tall, guiding traders to the elixir of success. Support and resistance levels, the bedrock of this approach, depict price thresholds where cryptocurrencies halt their descent or ascent, as buyers and sellers clash in a delicate dance.

Trend lines, like celestial navigational aids, form straight paths on the price chart, connecting historical price points. They confer upon traders the vision to decipher the prevailing trend’s trajectory and, perhaps more crucially, foresee potential reversals.

Moving averages, those celestial harmonizers, smooth out price data, enabling traders to discern trends over specific periods. They filter out market noise, casting the spotlight on the direction of the grand symphony of price movements.

The Enigmatic RSI and Chart Patterns Unveiled

Amidst the ever-shifting tides of the crypto market, two enigmas beckon our attention. The first is the Relative Strength Index (RSI), a formidable momentum oscillator gauging the velocity and amplitude of price changes. In its whisperings, traders find the haunting echoes of overbought and oversold conditions, cautioning against irrational exuberance or unwarranted despair.

Next, we traverse the realm of chart patterns, where geometrical revelations hold the key to unlocking market secrets. Behold the head and shoulders, a portentous triplet of peaks, signifying an imminent trend reversal. The double tops and bottoms, as dual protagonists of transformation, foretell a new chapter in the crypto saga. Triangles, those geometric weavers, embroider consolidation periods in the crypto tapestry, each side whispering of future price leaps.

Candlestick Patterns: Illuminating the Path

In the shadows of the crypto realm, candlestick patterns cast their flickering light, illuminating the path for intrepid traders. Bullish formations like the hammer, engulfing pattern, and morning star breathe hope into the hearts of those longing for price ascension. Alas, the bearish specters of the shooting star, bearish engulfing pattern, and evening star forewarn of an impending descent into the depths of the abyss.

Fibonacci Retracement: Unveiling Hidden Harmonies

Amidst the chaos of the crypto cosmos, Fibonacci retracement emerges as a celestial conductor, revealing hidden harmonies in price movements. These divine horizontal lines, woven from the fabric of the Fibonacci sequence, herald potential support and resistance levels, guiding traders to strategic entry and exit points, while conjuring glimpses of the price’s future destination.

Harmonizing with Momentum Indicators

In this symphony of analysis, momentum indicators play a symphonic role. The Moving Average Convergence Divergence (MACD), that sonorous trend-following indicator, discloses the mystical interplay between two moving averages, unraveling the strength and direction of a trend.

Enter the Stochastic Oscillator, a rhythmic comparison of closing prices to price ranges over a specific period. It heralds the rising crescendo of overbought or oversold conditions, signaling potential market inflection points.

Volume: The Undercurrents of Price Movements

Beneath the surface, volume reveals its cryptic tales. The On-Balance Volume (OBV) bears witness to the ebb and flow of volume, unraveling the mysteries of buying and selling pressure. Meanwhile, the Chaikin Money Flow (CMF), that arcane fusion of price and volume, unveils the intensity of financial tides, guiding traders through treacherous waters.

Crafting a Trading Symphony: Strategies Unveiled

As the technical repertoire unfolds, traders master the art of crafting their unique symphonies in the crypto market. From the exhilarating rhythms of day trading, where chart patterns and indicators orchestrate rapid decisions, to the languid harmonies of swing trading, guided by trends and reversals over days and weeks, each strategy weaves its enchantment.

The timeless echoes of long-term investment strategies resonate, as traders employ technical analysis to fathom the very soul of cryptocurrencies, gauging their potential for a fulfilling future.

Navigating the Quicksands: Overcoming Challenges

Yet, amidst the triumphs, challenges lurk, demanding unwavering resolve. The crypto market’s tempestuous volatility calls for steadfast calm, a lighthouse to weather the storm. Beware the specter of market manipulation, ever haunting the trader’s path. The antidote? Rely on the harmonious chorus of multiple indicators, a sanctuary against deception.

Guard against the siren song of over-analysis, and find solace in the simple symphony of sound decision-making. Most crucially, master the art of emotional discipline, the virtuoso conductor that guides the trader through the sea of tumultuous emotions.

In the vibrant realm of crypto trading, technical analysis stands as a formidable ally, gifting traders the power of foresight. Embrace its wisdom, combine it with prudent risk management, and wield the baton of emotional discipline. Let the symphony of success resound as you navigate the captivating world of cryptocurrency trading. Happy trading, maestros of the crypto cosmos!

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Before we get started, follow a few obvious but important steps that should not be skipped.

If and when you decide to trade cryptocurrency, for heaven’s sake, start with strategies. Manage your risks, set limits on the amount you invest in a particular cryptocurrency, and don’t forget to use stop loss orders. Diversify your crypto portfolio; don’t put all your eggs in one basket.

Think about long-term investments (the crypto market isn’t going anywhere, it’s here and it’s not going anywhere, at least not for the foreseeable future). If you leave your money in the crypto market for a few months, it may bring you more profit. That’s enough for the basics. Now let’s look at cryptocurrency trading strategies.

The key points are

• Having a well thought out and proven strategy when trading cryptocurrencies is very important to profit in the cryptocurrency market.
• Cryptocurrency day trading strategy involves entering and exiting a position in the market during the same day.
• If you are more interested in stable and regular daily profits from cryptocurrency trading, then automatic trading may be right for you.

Cryptocurrency trading strategies

If you are here because you think that investing in cryptocurrency is a shortcut to riches, don’t do it, it is much harder than you think.

Having a well thought out and proven strategy when trading cryptocurrencies is very important to profit in the cryptocurrency market.

Depending on your risk tolerance and ultimate trading goals, you can choose the strategy that best suits your trading ventures and goals. Profiting from crypto trading is all about correctly predicting price fluctuations in the market. A strict set of rules and principles can be a good help in this.

Cryptocurrency day trading

Intraday cryptocurrency trading strategy involves entering and exiting a market position on the same day. It is also referred to as “intraday trading,” reflecting the fact that trades usually open and close on the same day.

Day trading in the cryptocurrency market is especially profitable because cryptocurrencies are quite volatile. A day trading strategy, of course, goes beyond mere guesswork.

You must have the right intraday cryptocurrency trading strategy and an understanding of fundamental and technical analysis. Most intraday traders rely on technical analysis to build the right trading ideas.

They use price action, volumes, chart patterns and other indicators to identify entry and exit opportunities to make investment decisions. They also monitor fundamental news and other developer-related updates that can affect digital asset prices, especially in the short term.

Here are strategies that can help you increase your profits from day trading in the market:

1. Scalping on Cryptocurrency.

Scalping is an intraday cryptocurrency trading strategy in which traders seek to capitalize on increased trading volume. They may exit trades a few minutes after entering, making a small profit.

Ideally, a scalper aims to make small profits. They scalp the market looking for small opportunities. Scalpers need huge capital to make a profit because the profits from this strategy are usually very small.

2. cryptocurrency arbitrage.

Arbitrage is one of the most popular strategies in the market. It involves buying a coin on one platform and selling it on another, using the difference in price between the two platforms. Like scalping, arbitrage tends to make small profits. Thus, the larger your order size, the more profit you can make.

Range Trading Crypto

In many cases, cryptocurrency will trade in a certain range for a long time. In some cases, big players will systematically manipulate the price of the coin up and down to profit in a range. If you notice these patterns, you can also take advantage of them. Thus, you should pay attention to overbought and oversold zones.

To summarize

Overbought means that buyers have met their needs and the stock is likely to be sold; oversold means the opposite. The chart indicators included in any reputable charting program can help you find these zones. Common indicators used for this purpose include the stochastic oscillator and the relative strength index.

Day trading cryptocurrency can be very profitable, especially for short-term traders. If you have the right cryptocurrency day trading strategy, you should have no problem. Keep in mind technical and fundamental analysis with an emphasis on technical analysis, as historical price analysis can tell you a lot about when to open and close a position.

Smart Trading

This one is also quite popular, it is a mix of different smart orders such as Stop-Limit and Trailing Stop-Loss. This strategy offers good control over risk and return and helps you better plan the positions you open and close. With this strategy, you only need to place 2 orders. Stop-Loss is used to limit losses if something goes wrong.

On the other hand, take profit is used to make sure that you make a profit whenever the market reaches the set conditions. You can also combine multiple take profits with stop losses to take your strategy to the next level.

When you use 2 or more take profits, you can spread the risk of the trade, which maximizes your chances of making a good profit. Although it is very similar to the previous method, it just simplifies everything and makes it less risky.

You will need to test them out and see which of these strategies works for you.

Automated Trading

If you’re more interested in stable and regular daily profits from trading cryptocurrency, then automated trading might work for you. There are many cryptocurrency trading robots available in the market.

Cryptocurrency trading robots can analyze the market around the clock and look for the best trading opportunities.

You can also enable smart trading orders, which will further increase its efficiency. This will help you invest in the cryptocurrency market with ease. This way, you can get on with your day and let the robot profit for you.

HODL Strategy

HODL is used daily by many crypto traders. With this strategy, both the risks and opportunities are limitless. You can lose everything or make huge profits with this strategy. One of the best things about HOLD is that all you have to do is just buy digital currency without setting a take profit or stop loss.

This trading strategy can either help or break you, so it’s important to really think about the risks before you decide to use it. Let’s say you buy a BTC and its price goes up 15 percent on the second or third day after you buy it.

You will make a good profit even in that short time. But if the price falls sharply, you will lose. But most crypto traders who use the HODL strategy invest when the price is very low and profit as soon as the price rises sharply.

Since this is very risky, it is very important for traders to have a specific mindset when trading. Essentially, you must be able to trust your instincts and decisions, otherwise it will be difficult to make good profits with this strategy.

Note: Invest an amount of money that you can afford to lose when using the HODL strategy.

With this strategy, you can avoid market volatility and survive short-term price fluctuations when trading cryptocurrencies.

While all of these strategies are really good, they all have their advantages and disadvantages. For best results, it would be better to use all these strategies once you gain enough experience.

Diversification is a very important step to success in any market, and cryptocurrency trading is no exception. You can allocate funds to each strategy according to your personal preferences.

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What is a candlestick chart?

A candlestick chart shows the change in the price of an asset over a specific period. Traders can choose the periods they study depending on whether they are deciding on a low or high timeframe. Each candlestick can be set for any time period, from one minute to an entire month. A candlestick has four main components: high, low, open and close. When trading, the price of the asset at the beginning of the trading period is denoted by the “opening price” and at the end of the period by the “closing price”. At the same time, the “high” and “low” are the highest and lowest price of an asset reached during a trading session.

How to Read Candlestick Charts

Traders use candlestick charts to display the price dynamics of an asset. These charts get their name from the long lines (wicks) and rectangular shapes that are used to show price movements over a period of time. With the help of candlesticks, you can get an idea of the price movements as well as familiarize yourself with the general mood of the market for a particular asset. Over time, many candlesticks form into large patterns from which crypto traders get signals to make critical trading decisions. At first glance, candlestick charts may seem too difficult to understand. However, the more you study them, the more information they provide compared to simple line charts.

A red candlestick

A red candlestick shows that the closing price was lower than the opening price. In other words, the price of the asset decreased during the specified trading period. For example, let’s assume that the red candle shown above is a minute candle. In this case it means that the price of the asset closed below the level at which it opened one minute ago.

A green candlestick

If the candlestick turns green, then the price of the asset has risen and closed above the opening price. Wicks simply represent the difference between the open/close prices and the maximum/minimum prices reached in a given period. For example, let’s consider a green 10-minute candle that looks like the one pictured above. The upper wick means that at some point during the 10 minute period, the price rose above the last closing price. The difference between the maximum price reached and the closing price is represented by the upper wick. Likewise, the lower wick represents the difference between the opening price and the lowest price reached during that 10-minute period.

Important candlestick patterns you should know

There are several methods of reading and using a candlestick chart. Pattern recognition is used to predict trends, price direction and general dynamics. For a better understanding, we have compiled a list of bullish (indicating rising prices) and bearish (indicating falling prices) patterns that you should know.

Bullish patterns

Hammer

When it comes to outward similarities, the Hammer is exactly the kind of pattern that is very easy to recognize. The base of the downtrend has a long lower wick, like a normal hammer. The body is often small and the upper wick is short or may not be there at all. The hammer may be green or red. Depending on the situation, this may indicate an anticipated price increase or a strong trend reversal. The image below shows that after a period of high selling pressure, the bottom was broken. Immediately thereafter, the buyers began to gain momentum, hence the long bottom wick. Once the hammer formed, the trend reversed and prices began to rise.

Inverted Hammer

The only difference between an Inverted Hammer and a regular Hammer is that the long wick is directly above the body, not below it. The Upside Down Hammer can be green or red. Equally as a regular Hammer, an inverted Hammer signifies the potential beginning of an uptrend.

Bullish Engulfment

Two candles form this pattern at the end of a downtrend. The first candle is red (bearish), while the second is green (bullish) and much larger than the first. Simply put, the body of the second candle is big enough to completely absorb the previous one. In addition, there should be a small gap between the opening and closing prices of both candles. In most cases, these gaps are not common in the cryptocurrency markets. This pattern shows that buyer pressure has increased significantly and is breaking the sellers’ pressure.

Penetrating Line

This candlestick pattern is formed by a long red bearish candle followed by a long green candle. It occurs at the end of a downtrend. There is a gap between the opening and closing price of both candles. Also note that the green candle closes about halfway down the body of the bearish candle. This pattern shows that despite a bearish start, buyer pressure is increasing sharply within the second candle. This means that the bulls are showing considerable interest in buying at the prevailing price.

Morning Star

This pattern is formed by three separate candles at the bottom of the downtrend. The first bearish candle is quite long and the second, known as the star, has long wicks and a short body. The “star” closes below the previous candle. However, the third candle shifts toward the bull market and closes just above the midpoint of the first candle. This pattern shows that the pressure of the downtrend is decreasing and beginning to shift into an uptrend.

Bear patterns

Hanging

This pattern is considered a bearish alternative to the Hammer. It is usually formed at the end of an uptrend with a long lower wick and a small body. It may be red or green. This pattern shows that the uptrend has weakened and traders consider this a signal to sell.

Shooting Star

This pattern consists of a single candle with a very small bottom wick and a thin body, while the top wick is quite long. Unlike the Inverted Hammer, this pattern occurs at the peak of an uptrend. It means a rejection of price immediately after a significant rise. Such a pattern is a sign of a bearish reversal.

Bearish takeover

A bearish takeover is formed by two candles. Like its bullish counterpart, the first candle is green (bullish), while the second is red (bearish) and big enough to engulf the first. The body of the second candle is bigger than the first. There is also a gap between the opening and closing prices of each candle. This pattern occurs at the top of an uptrend. This bearish takeover shows that seller pressure has increased and signifies the beginning of a possible downtrend.

Conclusion

No matter how effective and useful candlestick patterns are, remember that it takes a lot of experience to use these signals effectively. In fact, most traders use candlestick patterns along with other technical indicators for trading to more closely check and confirm trends.

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Changes in value in cryptocurrency and other markets are usually presented in the form of a chart, where the price of an asset over a certain period of time is indicated. This timeframe is called a timeframe, and it is considered to be the main tool of exchange trading.

Timeframes come in different intervals: minute, hour, day, etc. It is recommended to select them depending on the type of trading. There are no universal timeframes, and a trader needs to learn how to work with charts in all timeframes.

Scalping is defined as earning on fast oscillations of the price of an asset. The essence of this method is to close a large number of deals with insignificant profit, which eventually brings considerable income. It is recommended to use one-minute timeframe for scalping. It is also noted that trading in short-term timeframes takes a trader’s whole day and is accompanied by a fairly high psychological load, so it is better not to use this trading method for beginners.

Intraday trading

To keep track of the quotes movement in one-minute and 15-minute timeframes. According to him, such timeframes are good for traders who are going to close trades on the day they are opened.

Mid- and Long-Term Trading

Minute timeframes are not suitable for trading cryptocurrency in the medium and long term, because they are not informative in this case. For medium-term trading, it is advised to use hourly and daily timeframes. In the case of long-term trading, experts recommend working with daily and weekly timeframes to be able to make predictions for the long term.

Why it is important

Incorrect work with timeframes can lead to losses. According to the experts, traders often think that it is easier to make money on the short-term timeframe, as the chart moves quickly there. However, the higher the time frame, the better technical analysis works because there is less market noise on medium- and long-term timeframes.

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Relative Strength Index (RSI)

The Relative Strength Index (RSI) is an impulse indicator, which provides indications on the basis of which one can conclude whether an asset is overbought or oversold. It does so by measuring the magnitude of recent price movements (the standard setup consists of 14 periods, 14 days, 14 hours, etc.). The data is then displayed as an oscillator, which can have a value between 0 and 100.

Since the RSI is an impulse indicator, it represents the force with which price changes. This means that if the indicator is increasing when the price is rising, the upward trend is strong and more and more buyers are coming. On the contrary, if the indicator measure decreases and the price increases, it may indicate that the sellers may soon gain control of this market.
The traditional interpretation of RSI is in the numerical reading of the line on the chart: if it is above 70, then the asset is overbought, and when it is below 30, then the asset is considered oversold. Thus, extreme values may indicate an impending trend reversal or pullback. However, it would be better not to consider these values as direct buy or sell signals. As with many other technical analysis (TA) methods, RSI can produce false or misleading signals, so it’s always a good idea to consider other factors before entering a trade.

Moving Average (MA)

The Moving Average (MA) smoothes out price fluctuations, filtering out market noise and highlighting the direction of the trend. Because the MA is based on past price data, it is a lagging indicator.

The two most commonly used moving averages are the simple moving average (SMA or MA) and the exponential moving average (EMA). The SMA is formed on the basis of price data for a certain period, and their average value. For example, a 10-day SMA is constructed by calculating the average price of the past 10 days. The EMA, on the other hand, gives more weight to the most recent price data. This makes it more sensitive to recent price changes.

As mentioned above, the moving average is a lagging indicator. The longer the period, the longer the signal lag. Thus, a 200-day SMA is much slower to react to a recent price change than a 50-day SMA.
Traders often use ratios of price to specific moving averages to gauge the current trend. For example, if price stays above the 200-day SMA for an extended period, then most traders consider such a market to be bullish.

Traders can also use crossovers or so-called crossovers of moving averages as a signal to buy or sell. For example, if the 100-day SMA crosses over the 200-day SMA, this might be considered a sell signal. But what exactly does this cross mean? It indicates that the average price of the last 100 days is now lower than the last 200 days. The selling idea here is that short-term price movements no longer follow the uptrend and in most cases the trend could change.

Moving Average Convergence/Divergence (MACD)

MACD (short for Moving Average Convergence Divergence) is a technical indicator, designed to determine the future price movement of an asset by means of interconnecting two moving averages. It consists of two lines: the MACD line and the signal line. The MACD line is calculated by subtracting the 26-day EMA from the 12-day EMA and plots the result against the 9-day EMA, which serves as the signal line. Many charting tools often include a histogram that shows the distance between these lines.

By looking for a divergence (divergence) between the MACD and the price movement, traders can get an idea of the strength of the current trend. For example: the price shows a new maximum, while the MACD shows a very low reading, which indicates that the market could soon reverse. Because of this indicator, we can conclude: that with such a high price and low momentum there is a high probability for a pullback or reversal.

In addition, traders can use this indicator to look for crosses between the MACD line and its signal line. As a rule, a signal to buy is considered when the MACD line crosses the signal line from bottom to top. And vice versa, a point where the MACD signal line crosses the signal line downward is considered a sell signal.

The MACD is often used in conjunction with the RSI because both indicators measure momentum, but do so from different data. It is suggested that together they can give a more complete technical view of the market.

Stochastic RSI (StochRSI)

Stochastic RSI (Relative Strength Index) is an oscillator, which tracks the price movements to determine if an asset is overbought or oversold. As the name implies, the stochastic is a derivative of the regular RSI, which is formed on the basis of basic indicators instead of price data. The indicator is calculated by applying the stochastic RSI formula to regular RSI values. The standard settings of the indicator range from 0 to 1 (or 0 to 100).

Due to its sensitivity, the stochastic RSI can generate many difficult to interpret trading signals. As a rule, it tends to be most useful when indicators are near the upper or lower extremes of its range.

If the RSI stochastic is above 0.8 it is considered overbought and a value below 0.2 may indicate over-sold. A value of 0 means that RSI has the lowest value in the measured period (the default setting is usually 14). Alternatively, a value of 1 means that RSI has the highest value during the measurement period.

Similar to the standard indicator settings, stochastic RSI overbought or oversold signals do not mean that price will go in the exact direction the indicator is pointing. In this case, it simply indicates that the RSI values (from which the stochastics RSI values were derived) are close to the extremes. It is important to remember that stochastic RSI is more sensitive than its predecessor, so it generates more false or misleading signals.

Bollinger Lines (BB)

Bollinger Lines measure the volatility of the market and also determine overbought and oversold levels of an asset. The indicator consists of three lines: SMA (middle band), upper and lower bands. The settings can vary, but basically the upper and lower lines are two standard deviations from the moving average. The distance between the lines is directly related to volatility, the distance changes when it increases or decreases.

As a rule, the closer the price is to the upper line, the more overbought the chosen asset is. In the opposite situation, the closer the price is to the bottom line, the higher it is oversold. In most cases the price does not go beyond the lines, but it is possible that it may break above or below them. While this scenario may not be a trading signal in itself, it serves as an indicator of extreme market conditions.

Another most important concept from the lines is called squeeze (from the English squeeze). This case refers to the period of low volatility, when all the lines are very close to each other. In this situation, the indicator can signal the potential volatility in the future, in the opposite case, if the lines are at a great distance from each other, it can indicate a possible decrease in price fluctuations.

Conclusion

Although technical indicators provide data to help you navigate the market, it’s important to keep in mind that the interpretation of such data is highly subjective. Therefore, before you form your trades you need to take care that your personal biases do not influence your decision-making in any way. What might be a direct buy or sell signal for one trader will look like mere market noise to another.
As with most market analysis methods, indicators are most effective when used in conjunction with each other or with other methods, such as Fundamental Analysis (FA).
The best way to learn technical analysis (TA) is through plenty of practice.

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The patterns are based on the observation of the chart. Traders have noticed that the charts in trading terminals and analytical platforms can “draw” figures – to form a visual “picture” from candlesticks and lines. Recall how the Big Dipper looks like in the night sky – seven bright stars are connected by lines, and a bucket is formed. Traders determine patterns in approximately the same way. Only instead of stars, they use candlesticks indicating maximum and minimum prices in the time interval.

Most patterns are determined visually. You can use the drawing tools and lines available in many terminals for convenience. Detection of a pattern can serve as a signal to open a position. Most of the patterns involve a trend reversal or signal the continuation of a trend. Other patterns are universal – the signal depends on the trend and the position of the pattern on the chart.

Chart patterns can be used by mid-term and intraday traders. It depends on the trader’s strategy and on the particular pattern. Some patterns show better results on small timeframes (1m to 1h), but most are confined to medium timeframes (1h to 1d).

Of course, shapes are no guarantee that the market will go exactly as predicted. But searching for and correctly reading the patterns will help a trader to determine the trend, market dynamics, possible entry and exit points. Let’s consider existing patterns and situations when they occur.

Trend reversal patterns

When head and shoulders, double/triple top/bottom patterns appear, a change in the current trend or a serious price correction is likely. Often such patterns are formed at the historical maximums or at the strong support/resistance levels.

Head and shoulders

Head and shoulders pattern represents three tops. The middle one (head) is the highest, the tops on the edges (shoulders) are approximately at the same level. Entry into the position is possible at the breakdown of the neck line or at the price testing after the breakdown. In a downtrend, the pattern is formed mirrored.
triangle, ascending triangle, descending triangle, symmetrical triangle, bullish wedge, bearish wedge, wedge

Double top and double bottom

This pattern represents two/three tops or bottoms stopping at the same level. The price returns to the last low or high and then breaks the low/maximum, reversing in the other direction.
A double top is formed in the same way as a triple top. The key difference is that the support line is broken after the second peak. Traders look for entry points after the level breakdown or its subsequent testing.

Diamond

The “Diamond” pattern is a signal of a possible trend change. Sometimes this pattern is called “Diamond”, “Rhombus” or “Crystal”. A diamond looks like a quadrangle with the corners facing upwards, downwards and sideways. The upper and lower corners are approximately on the same axis, a slight shift is allowed.

When forming a diamond, extrema first move away from each other, then get closer. For example, if the figure appears on a falling trend, the lows will be renewed, each peak will be further from the previous one. After the peak divergence (central axis), the lows will rise and the highs will fall, narrowing the right corner of the diamond.

If the diamond is formed on a rising trend, a fall in price is possible after it. Such a figure appears mirror-like – on a rising trend, first the timeframe maximums are updated, then the corridor between the extremums widens.

Pipe bottoms (Bull and bearish takeover)

The Pipe Bottom is a simple candlestick pattern found on large timeframes. It consists of two candles, so it doesn’t quite fit into the pattern concept. Nevertheless, a pipe bottom can be represented as a geometric figure – a rectangle stretched downwards. A pipe bottom is two strong, long candlesticks, formed at the minimum price on the segment. The first candle is red, the second is green. Indicates a prolonged series of sales followed by a long bounce. They appear before a trend reversal, sometimes short-term, sometimes stable.

The inverse pattern is a pipe top. It is formed in a mirror manner, i.e. at maximum prices. The first candle is long and green, indicating a series of purchases. The second candle is red, indicating a series of sales. Whereas the bottom indicates a reversal to growth, the top indicates a reversal to a downtrend.

A similar pattern is the “Spike”. The difference of this pattern is that the Pipe bottom/top always consists of two long candlesticks of different directions. The spike may have additional short candlesticks. That is, the pipe is formed by one strong price impulse up/down and moves back, while the spike may “break up” into two or three candles, but with the same effect.

Three Crows

The Three Crows pattern is sometimes called the Three Black Crows pattern, where black means the market is over and the time for the “bears” is coming soon. This is not really a chart pattern, but rather a light candlestick pattern. But it’s very useful and easy to observe. It’s formed by red candlesticks and indicates a switch from a growth phase to a decline in price.

To “read” this model correctly, you need to consider the length of the previous green candlesticks. Three red candles are considered “black crows” when their combined length exceeds the combined length of the previous three green candles. Sometimes the appearance of crows is preceded by a small correction. For example, several short “sell” candlesticks. In this case, the “three crows” signal the confirmation of the selling trend.

Dragon

The Dragon is a rare pattern that portends a trend reversal. At least it consists of four points – “head”, “front paw”, “hump” and “back paw”. “Head” is the starting, upper point of the figure. It is a candle, completing a sideways movement/phase of small growth. After it a series of sales starts.

The second point is formed when the sales finish, the correction “upwards” and a series of green candles appears. The second point is the “forelegs”. The candle where growth is interrupted and the decline begins is the “hump of the dragon”. After the “hump”, sales continue until the price reverses on the “hind legs”. After the hind legs a large trend reversal begins (visual “dragon’s tail”). It is in the “tail” that traders open a buy position.

The “front paws” of the classic “correct” dragon are slightly lower than the “back paws” (about 10-15%). That is, the first candle is “cheaper” than the second, which forms the back legs.

The line drawn from the “head” to the “hump” should be descending. At the same time, both paw candles are placed below this line. The “hump” is placed at 30-50%, not lower. The fifth point is conditional – this is the place where the “head-hump” line crosses the chart after the price rebounds from the back legs. If you connect all the points with lines, you will get a zigzag tapered towards the end. The Fibonacci levels indicator can be used to calculate the distances between the points more precisely.

The Dragon can be bearish – it can appear after a series of purchases. Then the “head” is the point of sideways/sales exit before the growth phase. Otherwise it is strictly symmetrical: the first “paw” is the end of the long series of buys and a slight correction, with a short-term drop of the price, and the “tail” is the reversal of the big trend, coming from the “head” of the dragon.

Trend continuation patterns

After the end of the trend continuation pattern, the price movement in the previous direction is most likely. The main trend continuation patterns are the pennant, flag and rectangle.

Rectangle

Rectangle pattern (range, corridor, consolidation) is formed by horizontal support and resistance lines on the chart. The price gets into the range after the strong price impulses. The longer the price is in the range, the higher the probability of breaking through the boundary.
Rectangle pattern, patterns for analysis

Flag

The boundaries of the flag pattern are directed against the main trend. This pattern usually appears after strong price movements. The flag pattern may indicate that the bears took the correction as a reversal. It is possible to break through the boundaries of the channel and continue the trend in the same direction. Traders open a position after a breakdown of the boundaries of the flag in the direction of the main trend.

A bullish flag

When a bullish flag occurs, the price rises and then consolidates in a narrow range. The highs and lows of the correction are between the pattern boundaries. When the upper boundary of a bull flag is broken, the continuation of the main trend is most likely.
A bullish flag pattern for technical analysis, technical analysis in trading

Bear Flag

The bear flag pattern is characterized by a fall in price. After that the price consolidates and continues to move in a narrow range. If the bottom boundary of the bearish flag is broken, the downtrend is most likely to continue.

Pennant

A pennant is formed in a similar way to a triangle. The key difference is that the upper boundary of the pennant is downward while the lower boundary is upward. The pattern usually appears after strong impulse movements in the direction of the main trend.

A bullish pennant

A bullish pennant resembles a symmetrical triangle. As a rule, a bullish pennant pattern continues the current bullish trend. After the upper boundary of the pennant is broken, a price movement equal to the size of the pennant is possible.
bullish pennant pattern, bull pennant analysis

Bearish pennant

A bearish pennant is a mirror image of a bullish pennant. The pattern appears after a strong decline in price and ends with the appearance of a triangle in the form of a pennant. Usually a bearish pennant continues a bearish trend.
bearish pennant pattern, tehanalysis bearish pennant

A cup with a handle

“Cup and Handle” is a compound pattern that symbolizes the continuation of a trend. It is formed in the bull market and may serve as a signal to open buy positions. Conditions for the appearance of the “cup” may be described as several attempts of the “bears” to break the “bullish” trend. It usually appears after an upward price spurt and several high green candles.

After a bullish pullback, there is a struggle phase. It looks like a renewal of the lows and then the growth of the minimum extremums. At the same time, the highs are not updated – all the volatility is lower than the horizontal line drawn from the last candle of the “tug”. As a result, the lows describe a semicircle. The “cup” phase continues until the lows align with the original position.

When the “cup” is formed, the “bears” attempt to push the price down – this fighting phase forms the “handle”. If the buyers are stronger, the price trend continues to rise.

A mirror pattern – an inverted cup with a handle – is less common. Such pattern, respectively, occurs during a “bearish” trend and signals about its continuation. The “cup” phase is formed not by the lows but by the highs and also looks like an arc.

Golden cube

It is a quite rare pattern that occurs at the “sideways”. It signals the continuation of a flat, if it appears within a stable trend – the continuation of the trend. It looks like four candles, almost equal in size. These candles should be placed in a square. The height of each candle should be approximately equal to the width of the whole “bunch” of four candles.

It is permissible for the candles to differ slightly in body length. The length of the wicks makes no difference. It’s important that the candles were not too long, relative to the neighboring “neutral” candles. Otherwise, the figure can be interpreted as a spike and a signal of a trend reversal.

Undefined patterns. Double-sided patterns

Undefined patterns can inform the trader about both trend continuation and reversal. The price direction depends on the slope of the pattern lines in relation to the current trend.

Triangle

A triangle is usually formed when the top and base of price move toward each other (like the sides of a triangle). Often this pattern is referred to as a trend continuation pattern. In practice, a trend reversal is possible with a triangle.

Rising Triangle

An ascending triangle has a horizontal resistance line. With each wave, the lows are anchored higher and the price range becomes narrower. Usually, traders consider breaking the resistance line or rolling back to it to enter long positions.

Downward Triangle

In a descending triangle, one side of the pattern is formed by horizontal support and the other by declining highs. A descending triangle is the opposite of an ascending triangle. With this pattern, traders look for entry points after a breakdown of support or a pullback to it.

Symmetric Triangle

A symmetrical triangle reflects a situation in which the tops of prices are lower and the bottoms of prices are higher. Both sides of the triangle have the same angle of inclination. With this pattern, it is extremely difficult to determine the price movement. A breakout can provoke a price movement equal to the size of the pattern.

Wedge

In a rising trend, a trader can observe a bearish or bullish wedge. Unlike triangles, wedges do not have a flat side. Both sides slope in the same direction.

A bullish wedge

In a bullish (downward) wedge, local lows are updated. At the same time, the price in the range slows down. Therefore, on a rising chart, a bullish wedge looks like a small correction. The highs and lows of the wedge converge. Traders usually open short positions after breaking the upper boundary of the bullish wedge.

Bearish wedge

A bearish (rising) wedge is formed similarly to a bullish one. The difference is that the local maximums are being updated. The price slows down in a decreasing range. In a bearish wedge, a trend reversal or subsequent correction is possible.

Three Indians

Three Indians is a pattern formed from a trendline. It is sometimes called the Three of Touches. The second name accurately reflects the meaning of the pattern – the price must touch the drawn line three times for the trader to perceive the figure as a signal to trade.

The Three Touches can be used as a trend reversal indicator or as a confirmation indicator – depending on the type of pattern formed. For example, if three minimum touches are found (the line is plotted below the candlesticks), with each minimum higher than the previous one, this is a signal for the continuation of a bullish trend. If the line is above the candlesticks, touches three highs, and each high is higher than the previous one, it can be expected that the trend will reverse and the price will fall.

On a downtrend, the pattern reads in a mirror manner. Three lows, each lower than the previous one – continuation of the bear market. Three highs, each lower than the previous one – trend reversal to growth.

Harmonic Patterns

Harmonic patterns are complex patterns consisting of at least five points. The correct interpretation of harmonic patterns depends on the figure and its proportions. That is, the pattern signal should be considered only if the figure corresponds to the necessary parameters.

The proportions in GP are defined as the level of correction (in some sources – correlation). Simply speaking, one point of the pattern must “rollback” from the previous price by n-level. Or vice versa – to rise in the price to the necessary level, so the point can be considered an element of a pattern. You can use the tool “Fibonacci Correction” for calculations. Modern analytical platforms and terminals have auxiliary tools – templates.

For example, in TradingView there is “Template XABCD”. The trader just needs to put five points on the chart, and the indicator will automatically calculate the proportions between X, A, B, C and D. If the obtained proportions correspond to the pattern rules (see below for the rules), the pattern can be perceived as a signal.

Gartley’s butterfly

The Gartley’s butterfly is a harmonic pattern, consisting of five points. It looks like two triangles connected in one place. The first point of the butterfly is placed on the candle, at the beginning of a sharp price decline. The candle completing the series of sales before the reversal is the second point. It can be called the lower part of the left “wing” of the butterfly. After that the price rises again to a relatively high level. But not higher than the starting point. Thus, the first “wing” is formed – a triangular pattern.

After the end of the first wing the price goes down again – to the level close to the lower corner of the first “wing”. The price does not necessarily have to reach the same level as in the first wing. The angle of the second wing may be slightly higher or lower. But visually it forms the second triangle. The subsequent bounce continues until the price rises higher than the point of convergence of the two “wings”. After that, the pattern is formed.

The standard “Gartley’s butterfly” implies that the distance from the second point to the third is approximately equal to the distance from the fourth point to the fifth. In harmonic patterns, this principle is known as “AB=CD”. In this case, if you draw segments between AB and CD, they will be placed almost parallel (perhaps not perfectly, but approximately).

The first point is denoted as “X”. If the segment from X to A goes from the bottom to the top and from C to D goes from the top to the bottom, such a butterfly is considered “bull”. After it is formed the growth of the instrument price is expected. If the ray from X to A goes downward, and from C to D goes upward, the butterfly is bearish and causes the price to fall.

An important point is the proportions of the butterfly. They depend on the ratio of corrections. The ideal pattern has an XB of 0.61, AC of 0.78, BD of 1.27 and XD of 0.78. Many trading/analytical platforms (for example, TradingView) have special tools that allow building “XABCD” patterns and automatically calculate the correction parameters.

Bat

The “Bat” figure also belongs to the harmonic patterns. Visually, the bat resembles the “Gartley’s Butterfly”, but with different construction parameters.

“Bull” bat consists of two triangles, whose sharp corners face upwards (points A and C). The line from X to A goes from bottom to top, and from C to D – from top to bottom. The “bear” bat has its angles facing downward, the line XA goes downward from the top, and the line CD goes upward from the bottom.

Visually, the bat differs from the Gartley’s Butterfly by its narrower “wings”, especially at points A and C. The ideal proportions of this pattern by correlation: XB – from 0.32 to 0.50, BD – from 1.61 to 2.61, AC – from 0.38 to 0.88. The most important segment is XD. Here the ideal correlation parameter is 0.886. That is, the price of point D correlates with the price of point X by 0.886%. In other words – the candlestick, forming the point X, is a little higher than the candlestick of the point D in a “bearish” pattern. And a bit lower if the pattern is bullish.

The Crab

The harmonic pattern “Crab” can herald the appearance of a downward or upward trend in prices, depending on the position of the pattern. A “Bullish” crab is a pattern of five points where the first point is higher than the fifth point. The other three points are higher than the line drawn between the first and fifth. The segment drawn from the first to the second point goes upward. From the fourth to the fifth point it goes down. The “bear” crab has the first and fifth points higher than the others. The line from the first to the second point goes downward, from the fourth to the fifth point goes upward.

The “crab” can be distinguished from the “bat” by paying attention to the central point (the third, B). If you draw a conventional line X-D, the point B in the “crab” will be noticeably lower than this line and closer to the “floor” of the figure in the “bearish” variant and to the “ceiling” in the “bull” one. In the “bat” the point B is much closer to the center of the figure.

The ideal proportions of the correlation levels: XB – 0.38 to 0.61, BD – 2.24 to 4.23, AC – 0.38 to 0.88. The ideal XD correlation ratio is 1.618.

Shark

Shark is a pattern close to the “Butterfly” and “Bat” patterns. The key difference of the “Shark” is that the last point is much higher than the starting point. The figure is slightly shifted visually.

If you draw conditional lines from the first point to the second, from the second to the fifth and from the fifth to the first, you get a narrow triangle with an acute angle at the last point of the figure. The “Shark” points are usually designated as 0XABC (in other harmonic patterns – XABCD). This is due to the fact that “Shark” can go into a 5-0 pattern. Accordingly, the 5-0 pattern will start from point X, the second point of the “Shark”.

The ideal Shark has the following proportions of correlation: XB – 1.13 to 1.61, AC – 1.61 to 2.24, 0C – 1.13. For a “bull” Shark the segment 0C is at the bottom of the figure. The line 0X goes from the bottom to the top, the line BC goes from the top to the bottom. Point B is above point X, point A is below points X and B. The “bearish” Shark has the 0X line going down from above, the BC line going up from below. Point B is below point X, point A is above points X and B. The segment 0C is placed in the upper part of the figure.

5-0
The “5-0” pattern is five points spaced on the chart extrema, taking into account the correlation, between individual points. It is marked by XABCD points.
Pattern “5-0”, patterns of technical analysis
The pattern “5-0”, shown in purple
In a bearish pattern, the starting point (X) is placed higher than the second point (A) and forms the first triangle together with the third point (B). B is placed well above A, at the price high. The next points C and D are placed at the next minimum and maximum. Two triangles are formed, XAB and BCD.
Patterns 5-0 and Shark in technical analysis
The “5-0” pattern, combined with the “Shark” pattern. 0 – the first “Shark” point, X – the first “5-0” point. C – last “Shark” point, D – last “5-0” point. Shown on the left is a “bullish” version of 5-0, on the right – a “bearish” version.
Unlike other harmonic patterns, triangles can be visually very different, both in the direction of acute angles and in “area”. “Bullish” variant is formed mirror-like: X is below A, A is above B. The segment AC is in the upper part of the figure, BD is in the lower part.

The following correction parameters are necessary for the correct formation of the figure: the segment XB – from 1.13 to 1.61, AC – from 1.61 to 2.24. The BD segment should be close to a value of 0.50.

Conclusion

Patterns help a trader to predict the market development and price changes for an instrument. Technical analysis patterns do not guarantee the market development in the n-direction. Nevertheless, technical analysis is used in trading along with fundamental analysis, as it gives traders a deeper understanding of the market.

The post What are Technical Analysis Patterns appeared first on DaoGam.

How to conduct a technical analysis

Perhaps for newbies, the rules that govern technical analysis may seem too complicated at first. It is for such beginners that we have compiled this collection of basic knowledge necessary to get a more confident grasp of what technical charts, price trends and various indicators are. Of course, it is impossible to grasp the immensity in one article, but we will list the most popular technical analysis tools that are used by traders on both cryptocurrency and traditional markets. By and large, technical analysis is an analytical process that refers to anything that can be measured and attempts to systematize based on a sufficient amount of available market data. Such historical data is displayed on a technical chart.

Charts

If you are reading this, you probably have at least a general idea of what market charts look like. Nevertheless, let’s go over their basic characteristics again and those elements that are necessarily inherent in any type of technical chart, no matter what they look like. These elements include: (1) the symbol of asset and timeframe (timeframe), (2) the field for indicators, (3) the axes, displaying the price values and time period, (4) the toolbar.

The symbol of an asset is a shortened version of its name in the market: for example, BTC for bitcoin, ETH for Ethereum, GOOG for Alphabet Inc. shares, etc. A timeframe represents a time unit, which is taken as a basis for constructing a chart of price movements. For example, 1 Day (1 day) means that each bar on a given chart represents the price dynamics within a single day. By changing the duration of the time interval, the trader can “change the setting”, as if zooming in or zooming out the image. Accordingly, he can see and compare the price behavior in the short or long term. These patterns can be very different from each other. Next we see a row of indicators. We will look at them in more detail below. For now, let us just say that they are essentially algorithms, which display market data in different ways and allow the trader to try to get more information about the current trends. The price and time axis are usually located on the right and at the bottom of the chart, respectively. Their name speaks for itself. Finally, the toolbar offers the trader a whole set of tools that allow you to impose various lines and other symbols and images on the price, which can more clearly identify/evaluate the current market trend. All of these tools will allow you not only to better understand yourself, but also to clearly show others what trends you have noticed on the price chart. As a rule, any chart will offer you a huge number of settings and parameters to personalize the chosen platform to your personal needs and requirements in the most efficient way. However, none of this will matter until you understand what all of these tools are for in the first place. The answer is simple: they are all aimed at identifying and determining the current price trend.

Trends

The key objective of technical analysis is to identify trends. Two things are important: a trader needs to know what is happening in the market right now and also try to find signals and indications of what will happen to the price next, what changes are waiting for it and when it might happen. Trends can last for hours or years, which is why using timeframes of different durations is a good help. This allows you to distract from the momentary distortions and look at the situation in the longer term. There are three types of trends: rising, falling and sideways. These names explain the price behavior of each trend exhaustively – but, again, the time horizon of a particular chart must be taken into account.

There is a popular expression among members of the crypto community: “Don’t like the bitcoin chart? Take a wider view!”. This is due to the fact that if you change the scale of the VTC chart to a longer term, you can always see that the currency is moving in an uptrend. Zoom in closer and the dynamics of bitcoin over the last 2 years might make you question whether it is such a promising asset. So, it is important to always remember that besides hourly and daily charts, there are also weekly and monthly charts. However, we must not forget something else: no trend lasts forever. As technical analysts say, “a trend is your friend until it isn’t.” This is why it is so important to be able to predict the moment of a potential trend reversal – and this is what the analysis does. Of course, there is no one hundred percent guarantee for any prediction. It is only a question of the degree of probability of this or that scenario, so treat it simply as a weather forecast.

Turning Patterns

So, all traders seek to anticipate the moment of the coming trend reversal, so they always look for patterns that traditionally precede a change in market sentiment. One such pattern for many analysts is the head-and-shoulders pattern. It can appear on the chart in the background of both the upward and downward trend and become a signal of the end of the further price movement in this direction. The pattern got its name due to its characteristic appearance. In the frame of this pattern the price makes three consecutive peaks, the first and the third one (“shoulders”) look approximately equal and more modest than the second maximum (“head”). Such a model may not always look absolutely chrestomatically and symmetrically but many traders strive to find it on the price charts.

Do not forget that such a model may be formed on the chart and inverted. In this case, it may be a harbinger of completion of the downtrend and the soon transition to the growth phase. However, this is not the only way to predict the future price behavior.

Indicators

As we mentioned above, indicators are a way of passing the available market data through various algorithms. As a result, they can provide new useful information about the market trend. One of the most popular indicators is the moving average (MA). It analyzes the behavior of quotations for a certain number of days and presents the average price indicator for the period in the form of a line on the chart. As a rule, traders regard these lines as expected support or resistance areas. On the daily chart, the 50, 100 and 200-day MAs are most commonly used and are considered indications of a possible trend change. In general, an increase in price above the MA is a bullish signal, while a decline under such a line is a bearish one. Also, an additional weight to these lines gives their intersection on the long-term timeframes. Various traders use many different variations of MA as part of their own individual strategies.

Another widely used indicator for estimating the strength of the current trend and its possible reversal levels is the MACD (Moving Average Convergence Divergence). It is based on comparison of two MA moving averages (shorter and longer) superimposed on a chart and assesses the dynamics of their mutual position (convergence/divergence). As a rule, when working with this indicator you will see blue and red lines (though other colors are sometimes used), as well as bars, showing the distance between these lines. A bullish trend requires the blue line to be above the red, while a bearish trend requires it to be the other way around. Traders are most interested in the crossing of these lines, which is often a signal of a change in trend. Also, if there is significant divergence between the lines on the chart, it can indicate an overbought or oversold market. Finally, the MACD indicator can confirm the continuation of the current trend – if the lines attempt to cross, but instead bounce off each other.

Other popular trend indicators include the Relative Strength Index (RSI) and the Bollinger Bands. In any case, you should remember that none of the above-mentioned indicators is able to give you a 100% guarantee that the price will behave exactly as you expect. Indicators merely provide information which either confirms or questions some trading strategy you have developed. In addition, the use of multiple indicators will allow you to get more reliable trading signals about where the market is moving now.

Conclusions

We have reviewed only the tip of the iceberg, which is the technical analysis of the market, and considered the basic elements necessary for every beginner trader for successful and profitable trading. Nevertheless, these basic blocks will be presented on any popular trading platform. You can dive into the depths of the analysis for a long time, but there are many traders who prefer to do only the minimum set of simple tools, consisting of several indicators and trend lines. There is nothing wrong with that. After getting acquainted with the offered range, everyone is finally free to choose what he or she likes and develop his or her own strategy based on these tools.

The post Technical Analysis: What It Is and How to Read Charts appeared first on DaoGam.