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Technical Analysis for Beginners: A Comprehensive Guide
Technical analysis is a method of analyzing financial markets and making investment decisions based on the study of charts and patterns. It is used by traders and investors to identify trends, predict price movements, and make informed investment decisions.
In this guide, we will cover the basics of technical analysis, including the different types of charts, chart patterns, trend indicators, and other technical indicators.
Types of Charts
There are several types of charts used in technical analysis, including:
- Line charts: These charts show the closing price of a security over a period of time.
Here's an example of a line chart that illustrates a potential day trading scenario:
Price
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
|___________
Time
```
In this chart:
- The vertical axis (up and down) shows the price of the asset (in this case, a stock).
- The horizontal axis (left to right) shows the time.
- The asterisks (*) represent the price points at different times, forming a line chart.
- The chart shows a potential day trading scenario, where the price increases over time, with some fluctuations.
Line charts are useful for identifying trends and patterns in price movements, which can help inform day trading decisions.
- Bar charts: These charts show the high, low, open, and closing prices of a security over a period of time
Here's an example of a bar chart:
Price
$10.00
|
| _______
| | |
| | High |
| | |
| |_____|
| | |
| | Open |
| | |
| |_____|
| | |
| | Close |
| | |
| |_____|
| | |
| | Low |
| | |
| |_____|
|
|___________
Time
In this chart:
- The vertical axis (up and down) shows the price of the asset.
- The horizontal axis (left to right) shows the time.
- Each bar represents the high, low, open, and closing prices for a specific time period (e.g. a day or week).
- The top of the bar shows the highest price reached during the time period.
- The bottom of the bar shows the lowest price reached during the time period.
- The open and close prices are shown as horizontal lines within the bar.
Bar charts are useful for seeing the range of price action over a given time period, as well as identifying trends and patterns in price movements.
- Candlestick charts: These charts show the high, low, open, and closing prices of a security over a period of time, with the addition of a "wick" that shows the range of prices.
Here's an example of a candlestick chart:
```
Price
$10.00
|
| _______
| | |
| | High |
| | |
| |_____|
| | |
| | Open |
| | |
| |_____|
| | |
| | Close |
| | |
| |_____|
| | |
| | Low |
| | |
| |_____|
| |
| | Wick |
| |
|
|___________
Time
```
In this chart:
- The vertical axis (up and down) shows the price of the asset.
- The horizontal axis (left to right) shows the time.
- Each candlestick represents the high, low, open, and closing prices for a specific time period (e.g. a day or week).
- The body of the candlestick shows the range between the open and close prices.
- The wick (or shadow) shows the range of prices outside of the body, including the high and low prices.
- Green candlesticks indicate a bullish trend (close price higher than open price).
- Red candlesticks indicate a bearish trend (close price lower than open price).
Candlestick charts are useful for identifying patterns and trends in price movements, and can provide insights into market sentiment and potential trading opportunities.
Chart Patterns
Chart patterns are formations on a chart that can indicate a potential trend reversal or continuation......Some common chart patterns include:
- Reversal patterns: These patterns indicate a potential trend reversal, such as a head and shoulders top or a double bottom.
- Continuation patterns: These patterns indicate a potential continuation of the current trend, such as a triangle or a rectangle.
- Bilateral patterns: These patterns indicate a potential breakout in either direction, such as a symmetrical triangle.
Reversal Patterns
- Head and Shoulders Top:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
```
- Double Bottom:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| *
| * *
| * *
|
+-------------------
Time
```
Continuation Patterns
- Triangle:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
```
- Rectangle:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
```
Bilateral Patterns
- Symmetrical Triangle:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
Here are brief descriptions of each chart pattern:
- Head and Shoulders Top: Bearish reversal pattern
- Double Bottom: Bullish reversal pattern
- Triangle: Continuation pattern
- Rectangle: Consolidation pattern
- Symmetrical Triangle: Breakout pattern
Trend Indicators
Trend indicators are used to identify the direction and strength of a trend. Some common trend indicators include:
- Moving averages: These indicators show the average price of a security over a period of time.
- Parabolic SAR: This indicator shows the potential reversal points in a trend.
Here is an example of a chart with a Moving Average and Parabolic SAR:
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____MA(50)_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____PSAR_______
```
Explanation:
- The Moving Average (MA) is the blue line, which shows the average price of the security over the last 50 periods.
- The Parabolic SAR (PSAR) is the series of dots, which indicate potential reversal points in the trend.
- The MA helps identify the overall trend direction and provides support and resistance levels.
- The PSAR dots move in the direction of the trend, and a change in direction indicates a potential reversal.
In this example:
- The trend is bullish (upward), as the price is above the MA and the PSAR dots are below the price.
- The MA provides support around $45.
- The PSAR dots indicate potential reversal points around $42 and $50.
Please note that this is a simplified example and actual charts may show more complex scenarios.
Momentum Indicators
Momentum indicators are used to measure the strength of a trend. Some common momentum indicators include:
- Stochastic Oscillator: This indicator shows the relative strength of a security's price action.
- Relative Strength Index (RSI): This indicator shows the magnitude of recent price changes.
Here are examples of charts showing the Stochastic Oscillator and Relative Strength Index (RSI):
Stochastic Oscillator:
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Stoch(14,3,3)_____
```
Relative Strength Index (RSI):
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____RSI(14)______
```
Explanation:
- Stochastic Oscillator (Stoch):
- Measures the relative strength of a security's price action
- Oscillates between 0 and 100
- Levels above 80 indicate overbought conditions, while levels below 20 indicate oversold conditions
- Relative Strength Index (RSI):
- Measures the magnitude of recent price changes
- Oscillates between 0 and 100
- Levels above 70 indicate overbought conditions, while levels below 30 indicate oversold conditions
In these examples:
- The Stochastic Oscillator is indicating an overbought condition, as the %K line (blue) is above 80.
- The RSI is also indicating an overbought condition, as the RSI line (red) is above 70.
Please note that these are simplified examples and actual charts may show more complex scenarios.
Volatility Indicators
Volatility indicators are used to measure the size of the trading range. Some common volatility indicators include:
- Bollinger Bands: These indicators show the range of prices over a period of time.
- Average True Range (ATR): This indicator shows the average range of prices over a period of time.
Here are examples of charts showing Bollinger Bands and Average True Range (ATR):
_Bollinger Bands:_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Upper BB______
|_____Lower BB______
|_____Moving Average___
```
_Average True Range (ATR):_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____ATR______
```
Explanation:
- Bollinger Bands:
- Consist of a moving average and two standard deviations (Upper BB and Lower BB)
- Show the range of prices over a period of time
- Can be used to identify volatility and potential breakouts
- Average True Range (ATR):
- Measures the average range of prices over a period of time
- Shows the volatility of the security
- Can be used to set stop-loss levels and determine potential price movements
In these examples:
- The Bollinger Bands are contracting, indicating a decrease in volatility.
- The ATR is decreasing, indicating a decrease in volatility.
Volume Indicators
Volume indicators are used to measure the amount of trading activity. Some common volume indicators include:
- On Balance Volume: This indicator shows the flow of money into and out of a security.
- Volume Rate of Change: This indicator shows the rate of change in trading volume.
Here are examples of charts showing On Balance Volume (OBV) and Volume Rate of Change (VROC):
_On Balance Volume (OBV):_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____OBV______
```
_Volume Rate of Change (VROC):_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____VROC______
```
Explanation:
- On Balance Volume (OBV):
- Measures the flow of money into and out of a security
- Accumulates volume on up days and subtracts volume on down days
- Can be used to identify buying and selling pressure
- Volume Rate of Change (VROC):
- Measures the rate of change in trading volume
- Compares the current volume to the previous volume
- Can be used to identify changes in trading activity and potential trend reversals
In these examples:
- The OBV is increasing, indicating buying pressure.
- The VROC is positive, indicating an increase in trading volume.
Conclusion
Technical analysis is a powerful tool for traders and investors. By understanding the different types of charts, chart patterns, trend indicators, and other technical indicators, you can make more informed investment decisions and improve your chances of success in the markets.
Whether you're a beginner or an experienced trader, technical analysis can help you achieve your financial goals. With practice and patience, you can become proficient in technical analysis and start making more informed investment decisions today.
#CryptoTradingGuide #charts #Write2Earn! #BinanceTournament
In this guide, we will cover the basics of technical analysis, including the different types of charts, chart patterns, trend indicators, and other technical indicators.
Types of Charts
There are several types of charts used in technical analysis, including:
- Line charts: These charts show the closing price of a security over a period of time.
Here's an example of a line chart that illustrates a potential day trading scenario:
Price
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
|___________
Time
```
In this chart:
- The vertical axis (up and down) shows the price of the asset (in this case, a stock).
- The horizontal axis (left to right) shows the time.
- The asterisks (*) represent the price points at different times, forming a line chart.
- The chart shows a potential day trading scenario, where the price increases over time, with some fluctuations.
Line charts are useful for identifying trends and patterns in price movements, which can help inform day trading decisions.
- Bar charts: These charts show the high, low, open, and closing prices of a security over a period of time
Here's an example of a bar chart:
Price
$10.00
|
| _______
| | |
| | High |
| | |
| |_____|
| | |
| | Open |
| | |
| |_____|
| | |
| | Close |
| | |
| |_____|
| | |
| | Low |
| | |
| |_____|
|
|___________
Time
In this chart:
- The vertical axis (up and down) shows the price of the asset.
- The horizontal axis (left to right) shows the time.
- Each bar represents the high, low, open, and closing prices for a specific time period (e.g. a day or week).
- The top of the bar shows the highest price reached during the time period.
- The bottom of the bar shows the lowest price reached during the time period.
- The open and close prices are shown as horizontal lines within the bar.
Bar charts are useful for seeing the range of price action over a given time period, as well as identifying trends and patterns in price movements.
- Candlestick charts: These charts show the high, low, open, and closing prices of a security over a period of time, with the addition of a "wick" that shows the range of prices.
Here's an example of a candlestick chart:
```
Price
$10.00
|
| _______
| | |
| | High |
| | |
| |_____|
| | |
| | Open |
| | |
| |_____|
| | |
| | Close |
| | |
| |_____|
| | |
| | Low |
| | |
| |_____|
| |
| | Wick |
| |
|
|___________
Time
```
In this chart:
- The vertical axis (up and down) shows the price of the asset.
- The horizontal axis (left to right) shows the time.
- Each candlestick represents the high, low, open, and closing prices for a specific time period (e.g. a day or week).
- The body of the candlestick shows the range between the open and close prices.
- The wick (or shadow) shows the range of prices outside of the body, including the high and low prices.
- Green candlesticks indicate a bullish trend (close price higher than open price).
- Red candlesticks indicate a bearish trend (close price lower than open price).
Candlestick charts are useful for identifying patterns and trends in price movements, and can provide insights into market sentiment and potential trading opportunities.
Chart Patterns
Chart patterns are formations on a chart that can indicate a potential trend reversal or continuation......Some common chart patterns include:
- Reversal patterns: These patterns indicate a potential trend reversal, such as a head and shoulders top or a double bottom.
- Continuation patterns: These patterns indicate a potential continuation of the current trend, such as a triangle or a rectangle.
- Bilateral patterns: These patterns indicate a potential breakout in either direction, such as a symmetrical triangle.
Reversal Patterns
- Head and Shoulders Top:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
```
- Double Bottom:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| *
| * *
| * *
|
+-------------------
Time
```
Continuation Patterns
- Triangle:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
```
- Rectangle:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
```
Bilateral Patterns
- Symmetrical Triangle:
```
$10.00
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|
+-------------------
Time
Here are brief descriptions of each chart pattern:
- Head and Shoulders Top: Bearish reversal pattern
- Double Bottom: Bullish reversal pattern
- Triangle: Continuation pattern
- Rectangle: Consolidation pattern
- Symmetrical Triangle: Breakout pattern
Trend Indicators
Trend indicators are used to identify the direction and strength of a trend. Some common trend indicators include:
- Moving averages: These indicators show the average price of a security over a period of time.
- Parabolic SAR: This indicator shows the potential reversal points in a trend.
Here is an example of a chart with a Moving Average and Parabolic SAR:
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____MA(50)_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____PSAR_______
```
Explanation:
- The Moving Average (MA) is the blue line, which shows the average price of the security over the last 50 periods.
- The Parabolic SAR (PSAR) is the series of dots, which indicate potential reversal points in the trend.
- The MA helps identify the overall trend direction and provides support and resistance levels.
- The PSAR dots move in the direction of the trend, and a change in direction indicates a potential reversal.
In this example:
- The trend is bullish (upward), as the price is above the MA and the PSAR dots are below the price.
- The MA provides support around $45.
- The PSAR dots indicate potential reversal points around $42 and $50.
Please note that this is a simplified example and actual charts may show more complex scenarios.
Momentum Indicators
Momentum indicators are used to measure the strength of a trend. Some common momentum indicators include:
- Stochastic Oscillator: This indicator shows the relative strength of a security's price action.
- Relative Strength Index (RSI): This indicator shows the magnitude of recent price changes.
Here are examples of charts showing the Stochastic Oscillator and Relative Strength Index (RSI):
Stochastic Oscillator:
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Stoch(14,3,3)_____
```
Relative Strength Index (RSI):
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____RSI(14)______
```
Explanation:
- Stochastic Oscillator (Stoch):
- Measures the relative strength of a security's price action
- Oscillates between 0 and 100
- Levels above 80 indicate overbought conditions, while levels below 20 indicate oversold conditions
- Relative Strength Index (RSI):
- Measures the magnitude of recent price changes
- Oscillates between 0 and 100
- Levels above 70 indicate overbought conditions, while levels below 30 indicate oversold conditions
In these examples:
- The Stochastic Oscillator is indicating an overbought condition, as the %K line (blue) is above 80.
- The RSI is also indicating an overbought condition, as the RSI line (red) is above 70.
Please note that these are simplified examples and actual charts may show more complex scenarios.
Volatility Indicators
Volatility indicators are used to measure the size of the trading range. Some common volatility indicators include:
- Bollinger Bands: These indicators show the range of prices over a period of time.
- Average True Range (ATR): This indicator shows the average range of prices over a period of time.
Here are examples of charts showing Bollinger Bands and Average True Range (ATR):
_Bollinger Bands:_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Upper BB______
|_____Lower BB______
|_____Moving Average___
```
_Average True Range (ATR):_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____ATR______
```
Explanation:
- Bollinger Bands:
- Consist of a moving average and two standard deviations (Upper BB and Lower BB)
- Show the range of prices over a period of time
- Can be used to identify volatility and potential breakouts
- Average True Range (ATR):
- Measures the average range of prices over a period of time
- Shows the volatility of the security
- Can be used to set stop-loss levels and determine potential price movements
In these examples:
- The Bollinger Bands are contracting, indicating a decrease in volatility.
- The ATR is decreasing, indicating a decrease in volatility.
Volume Indicators
Volume indicators are used to measure the amount of trading activity. Some common volume indicators include:
- On Balance Volume: This indicator shows the flow of money into and out of a security.
- Volume Rate of Change: This indicator shows the rate of change in trading volume.
Here are examples of charts showing On Balance Volume (OBV) and Volume Rate of Change (VROC):
_On Balance Volume (OBV):_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____OBV______
```
_Volume Rate of Change (VROC):_
```
$50
|
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____Price_______
| *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
| * *
|_____VROC______
```
Explanation:
- On Balance Volume (OBV):
- Measures the flow of money into and out of a security
- Accumulates volume on up days and subtracts volume on down days
- Can be used to identify buying and selling pressure
- Volume Rate of Change (VROC):
- Measures the rate of change in trading volume
- Compares the current volume to the previous volume
- Can be used to identify changes in trading activity and potential trend reversals
In these examples:
- The OBV is increasing, indicating buying pressure.
- The VROC is positive, indicating an increase in trading volume.
Conclusion
Technical analysis is a powerful tool for traders and investors. By understanding the different types of charts, chart patterns, trend indicators, and other technical indicators, you can make more informed investment decisions and improve your chances of success in the markets.
Whether you're a beginner or an experienced trader, technical analysis can help you achieve your financial goals. With practice and patience, you can become proficient in technical analysis and start making more informed investment decisions today.
#CryptoTradingGuide #charts #Write2Earn! #BinanceTournament
BTC UPDATE!
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Nothing serious happened. Many people are crying that $23,300 was broken, but it is not that bad. The price is recovering fast.
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The price dumped exactly to our buy orders, we filled our bags with #BTC even harder.
Nothing serious happened. Many people are crying that $23,300 was broken, but it is not that bad. The price is recovering fast.
#crypto2023 #BTC #charts #cryptopmyoutube
Head and Shoulders Pattern A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is highest.
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#Binance #charts
#cryptotrading #zero2hero #BTC
#Binance #charts
What can we see on the charts?
During the analyses, you can often see all kinds of charts and diagrams from which they "predict" or just analyze what happened. In this regard, we have collected a few things for you to pay attention to when looking at these charts.
What are candles?
A candlestick is a type of price chart used in technical analysis that displays the high, low, and opening and closing prices of an asset for a given time period.
This method originated with Japanese rice traders who used it to track market prices and daily movements hundreds of years before it became popular in the United States.
The wide part of the candle is called the "real body". This shows traders where the price opened and closed within a given time period. And the wicks of the candle show the maximum and minimum price within the given period.
Source: Investopedia
Candles reflect the impact of investor sentiment on asset prices and are used by technical analysts to determine when to enter or exit trades. Candles can be used for any liquid financial instrument, such as stocks, currencies and futures.
Long green candles indicate strong buying pressure, meaning the price is rising. However, they should be examined in the context of the market structure, not individually. For example, a long green candle is likely to have more significance if it forms at a significant price support level. Long red candles, on the other hand, indicate significant selling pressure. This suggests that the price is falling.
By observing these candles, we can see trading patterns in the long or short term, which are used in the analysis.
The movements of Bitcoin in 2021. Source: trandingview.com
What is technical analysis?
Technical analysis, in short, is a trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement or volume.
Unlike fundamental analysis, technical analysis focuses on the study of price and volume. Technical analysis is often used to generate short-term trading signals, but it can also help assess the strength or weakness of an asset relative to the market. Information from the analysis helps analysts improve their overall valuation estimate.
Technical analysis as we know it today was founded by Charles Dow and the Dow Theory in the late 1800s. Today, technical analysis includes hundreds of patterns and signals developed over years of research.
Technical analysis is based on the assumption that past trading activity and price changes of an asset can be indicators of the future movement of the asset's price. So, it attempts to predict the price movement of any trading instrument that is subject to the forces of supply and demand, including stocks, bonds, futures, and currency pairs.
In fact, some view technical analysis simply as the study of supply and demand forces as reflected in the movement of an asset's market price. Technical analysis is most often concerned with price movements, but some analysts track numbers other than prices, such as trading volume.
Forms and market signals
There are hundreds of patterns and signals in the industry that have been developed by researchers to support trading with technical analysis. Some indicators primarily attempt to identify the market trend, such as support and resistance areas, while other indicators show the strength of the trend and the likelihood of its continuation. Commonly used indicators and chart patterns include trend lines, channels, moving averages, and momentum indicators.
A few examples of frequently used indicators:
Price trends
Chart samples
Volume and momentum indicators
Oscillators
Moving averages
Support and resistance levels
Limitations of technical analysis
A common criticism of technical analysis is that history does not exactly repeat itself, so the examination of the price pattern is of dubious importance and can be ignored.
His other criticism is that it only works in certain cases, but only because it has a self-fulfilling effect. For example, when a trader places a stop-loss order below the 200-day moving average of the price of a certain asset. If many traders have done this and the stock reaches this price, there will be a large number of sell orders that will push the price down, confirming the move traders expect.
Of course, knowledge of technical analysis offers its users an advantage in the market and is often used by professional analysts in conjunction with other forms of research.
For more content, follow us here, on Twitter, or visit our blog.
#cryptocurrency #crypto101 #candles #charts #cryptotrading
What are candles?
A candlestick is a type of price chart used in technical analysis that displays the high, low, and opening and closing prices of an asset for a given time period.
This method originated with Japanese rice traders who used it to track market prices and daily movements hundreds of years before it became popular in the United States.
The wide part of the candle is called the "real body". This shows traders where the price opened and closed within a given time period. And the wicks of the candle show the maximum and minimum price within the given period.
Source: Investopedia
Candles reflect the impact of investor sentiment on asset prices and are used by technical analysts to determine when to enter or exit trades. Candles can be used for any liquid financial instrument, such as stocks, currencies and futures.
Long green candles indicate strong buying pressure, meaning the price is rising. However, they should be examined in the context of the market structure, not individually. For example, a long green candle is likely to have more significance if it forms at a significant price support level. Long red candles, on the other hand, indicate significant selling pressure. This suggests that the price is falling.
By observing these candles, we can see trading patterns in the long or short term, which are used in the analysis.
The movements of Bitcoin in 2021. Source: trandingview.com
What is technical analysis?
Technical analysis, in short, is a trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement or volume.
Unlike fundamental analysis, technical analysis focuses on the study of price and volume. Technical analysis is often used to generate short-term trading signals, but it can also help assess the strength or weakness of an asset relative to the market. Information from the analysis helps analysts improve their overall valuation estimate.
Technical analysis as we know it today was founded by Charles Dow and the Dow Theory in the late 1800s. Today, technical analysis includes hundreds of patterns and signals developed over years of research.
Technical analysis is based on the assumption that past trading activity and price changes of an asset can be indicators of the future movement of the asset's price. So, it attempts to predict the price movement of any trading instrument that is subject to the forces of supply and demand, including stocks, bonds, futures, and currency pairs.
In fact, some view technical analysis simply as the study of supply and demand forces as reflected in the movement of an asset's market price. Technical analysis is most often concerned with price movements, but some analysts track numbers other than prices, such as trading volume.
Forms and market signals
There are hundreds of patterns and signals in the industry that have been developed by researchers to support trading with technical analysis. Some indicators primarily attempt to identify the market trend, such as support and resistance areas, while other indicators show the strength of the trend and the likelihood of its continuation. Commonly used indicators and chart patterns include trend lines, channels, moving averages, and momentum indicators.
A few examples of frequently used indicators:
Price trends
Chart samples
Volume and momentum indicators
Oscillators
Moving averages
Support and resistance levels
Limitations of technical analysis
A common criticism of technical analysis is that history does not exactly repeat itself, so the examination of the price pattern is of dubious importance and can be ignored.
His other criticism is that it only works in certain cases, but only because it has a self-fulfilling effect. For example, when a trader places a stop-loss order below the 200-day moving average of the price of a certain asset. If many traders have done this and the stock reaches this price, there will be a large number of sell orders that will push the price down, confirming the move traders expect.
Of course, knowledge of technical analysis offers its users an advantage in the market and is often used by professional analysts in conjunction with other forms of research.
For more content, follow us here, on Twitter, or visit our blog.
#cryptocurrency #crypto101 #candles #charts #cryptotrading
That's a pretty strong monthly close leading into the most bullish season of the year #BTC
#chartpatterns #charts #bitcoin #trading
#chartpatterns #charts #bitcoin #trading
BTC Broke out!
🔸BTC broke out of the bearish rising wedge! The next crucial support sits at 21,386.
🔸Breaking the 20k support would be bearish locally.
#dump #crypto2023 #BTCUSDT #BTCUSDTAnalysis #charts
🔸BTC broke out of the bearish rising wedge! The next crucial support sits at 21,386.
🔸Breaking the 20k support would be bearish locally.
#dump #crypto2023 #BTCUSDT #BTCUSDTAnalysis #charts
#Bitcoin-BTC Weekly Update
$BTC is just testing the resistance confluence of 37300$ resistance zone + ascending resistance on weekly I mentioned in previous feed post.
So far #BTC looks good for a breakout and more upside📈 Will See soon.
As per graph no need to panic! Totally Bullish. #CryptoTalks #crypto2023 #charts
$BTC is just testing the resistance confluence of 37300$ resistance zone + ascending resistance on weekly I mentioned in previous feed post.
So far #BTC looks good for a breakout and more upside📈 Will See soon.
As per graph no need to panic! Totally Bullish. #CryptoTalks #crypto2023 #charts
How often do you trade ? It depends on the movement, but everyone has a rule, make a rule with what makes you comfortable, just because you made profit does not mean that you should continue trading and the opposite is true. Set yourself a cool off period win or loose #TradingAdvice mount everest was not summitted in a day. Gather your #thoughts #analise #charts #StrategicMoves are best backtested before you dive in.
Never a financial advise, DYOR.
$SOL $MASK $HBAR
Never a financial advise, DYOR.
$SOL $MASK $HBAR
$PYTH has broken out the ascending triangle and currently approaching a retest. A long position can be opened if the retest is successful.
Follow and join us for more updates like this.🔥
#PYTH #PYTH/USDT #Write2Earn #charts
Follow and join us for more updates like this.🔥
#PYTH #PYTH/USDT #Write2Earn #charts
Facts that no one told you before (part 1) :-
People attempt to forecast the market by making ridiculous drawings and use indicators that are 99% inaccurate. In actuality, a lot of these indicators—which are frequently marketed by people who say they have deciphered the market code—turn out to be unreliable most of the time.
The question is simple and logical: if these indicators were really good, why would the suppliers disclose them instead of keeping the profit for themselves? because they already knew that their indicator is shit and then also you buy from them, Are you really that stupid? 🙄🙄
Although technical analysis can provide valuable insights, it is important to exercise caution when relying primarily on them for financial decisions.
I promise that you will be more successful if you use technical analysis without the indicators.
#TechnicalAnalysis #Indicators #charts
People attempt to forecast the market by making ridiculous drawings and use indicators that are 99% inaccurate. In actuality, a lot of these indicators—which are frequently marketed by people who say they have deciphered the market code—turn out to be unreliable most of the time.
The question is simple and logical: if these indicators were really good, why would the suppliers disclose them instead of keeping the profit for themselves? because they already knew that their indicator is shit and then also you buy from them, Are you really that stupid? 🙄🙄
Although technical analysis can provide valuable insights, it is important to exercise caution when relying primarily on them for financial decisions.
I promise that you will be more successful if you use technical analysis without the indicators.
#TechnicalAnalysis #Indicators #charts
Coin: #ROSE
Date: 02-05-23
Feeling; Bearish for mid term📉
Daily view: Showing sell signal❗️
H4 view: Bearish setup📉 [MID TERM]
Higher big Resistance: 0.6100$
Range zone: 0.06100 - 0.0580$
Daily support at 0.05700$ still holding, Short possible in case of breakout⏳
15% dump possible -->(0.04800$ - 0.04500$ support)
#Binance #trading #charts #DOGE
Date: 02-05-23
Feeling; Bearish for mid term📉
Daily view: Showing sell signal❗️
H4 view: Bearish setup📉 [MID TERM]
Higher big Resistance: 0.6100$
Range zone: 0.06100 - 0.0580$
Daily support at 0.05700$ still holding, Short possible in case of breakout⏳
15% dump possible -->(0.04800$ - 0.04500$ support)
#Binance #trading #charts #DOGE
#Write2Earn #BTC
How To Read Candlestick #charts
A candlestick chart is simply a chart composed of individual candles, which traders use to understand price action. Candlestick price action involves pinpointing where the price opened for a period, where the price closed for a period, as well as the price highs and lows for a specific period.
The period that each candle depicts depends on the time-frame chosen by the trader. A popular time-frame is the daily time-frame, so the candle will depict the open, close, and high and low for the day. The different components of a candle can help you forecast where the price might go, for instance if a candle closes far below its open it may indicate further price declines.
The image above represents the design of a candlestick, There are three specific points (Open, Close, Upper Wick, Lower Wick)
Open Price - The open price depicts the first price traded during the formation of the new candle
High Price - The top of the upper wick/shadow indicates the highest price traded during the period.
Low Price - The bottom of the lower wick/shadow indicates the lowest price traded during the period.
Close Price - The close price is the last price traded during the period of the candle formation
The Wick - The wicks also referred to as 'shadows' are the extremes in price for a specific charting period.
Direction - The direction of the price is indicated by the color of the #candlesticks . If the price of the candle is closing above the opening price of the candle, then the price is moving upwards and the candle would be green
Range - The difference between the highest and lowest price of a candle is its range, could be calculated as (Range = highest point – lowest point). #TrendingTopic
$XRP $SOL $BTC
How To Read Candlestick #charts
A candlestick chart is simply a chart composed of individual candles, which traders use to understand price action. Candlestick price action involves pinpointing where the price opened for a period, where the price closed for a period, as well as the price highs and lows for a specific period.
The period that each candle depicts depends on the time-frame chosen by the trader. A popular time-frame is the daily time-frame, so the candle will depict the open, close, and high and low for the day. The different components of a candle can help you forecast where the price might go, for instance if a candle closes far below its open it may indicate further price declines.
The image above represents the design of a candlestick, There are three specific points (Open, Close, Upper Wick, Lower Wick)
Open Price - The open price depicts the first price traded during the formation of the new candle
High Price - The top of the upper wick/shadow indicates the highest price traded during the period.
Low Price - The bottom of the lower wick/shadow indicates the lowest price traded during the period.
Close Price - The close price is the last price traded during the period of the candle formation
The Wick - The wicks also referred to as 'shadows' are the extremes in price for a specific charting period.
Direction - The direction of the price is indicated by the color of the #candlesticks . If the price of the candle is closing above the opening price of the candle, then the price is moving upwards and the candle would be green
Range - The difference between the highest and lowest price of a candle is its range, could be calculated as (Range = highest point – lowest point). #TrendingTopic
$XRP $SOL $BTC
Alright, send your chart request here: @Contact_ACS.
And I'll try my best to analyze them.
#charts #BTC #Write2Earn
And I'll try my best to analyze them.
#charts #BTC #Write2Earn
It's Sunday again, and it's time for our chart request session. Send your chart requests to @Contact_ACS. We'll start analyzing them in an hour. Share your favorite coin with us in the meantime.
Thank you.
Follow and stay with us for more.🔥
#charts #request #TrendingTopic #Write2Eam
Thank you.
Follow and stay with us for more.🔥
#charts #request #TrendingTopic #Write2Eam