Cryptocurrency trading allows you to make a lot of money. High profitability is related to the volatility of asset rates. But to trade successfully, you need to know how to predict the movement of charts.
The success of trading is almost 100% dependent on the correct prediction. If a trader correctly determines the future price movement of an asset, he will open the right position at the right time and collect all the profits. But mistakes can lead to the total loss of capital. Technical analysis of the cryptocurrency will help to make a correct prediction. This material will talk about them.
Technical analysis of cryptocurrency
This is one of the most widespread and also quite accurate methods of forecasting. It is based on the rule that the situation in the market is constantly repeating. This is due to the fact that the psychology of market participants is the same and they act according to the same schemes. It means, if a rate has behaved the same way in one case, it will behave the same way in a similar situation. Of course, mistakes and contingencies happen. But these exceptions only confirm the rules.
The principle of technical analysis is quite simple:
- The trader chooses a trading terminal and the cryptocurrency pair he wants to trade. The terminal may look like a separate application or a service on the exchange’s website. That is, in any case, it has built-in tools for technical analysis.
- The cryptocurrency speculator overlays various tools on the chart depending on the strategy chosen. He sets support and resistance zones, smoothed curves, Elliott waves, etc. But each of the tools has its own rules of use, which are given in the description.
- Then, using the tools, he determines the pivot point and opens a trading position. The methods for determining the reversal points are also described in the trading instruments’ manuals.
- After that, the only thing left to do is to wait for the reversal signal in the opposite direction. As soon as it appears, it is necessary to close the position and fix the profit.
Technical analysis can be applied manually or with the help of special utilities. They can be downloaded from the Internet. But it is necessary to carefully analyze such programs in order not to get caught by cheaters.
