There are two primary methods used to make investment decisions:
The price of an asset reflects the sum total knowledge of all market participants; their analysis, views and actions.
Technical analysis is the study of statistical trends, collected from historical price and volume data, to identify opportunities for trade. Technical analysts observe patterns of price movements, trading signal and other analytical tools to evaluate the strength and weakness of an asset.
Technical Analysis can be applied to any security with historical trading data such as cryptocurrencies, forex, commodities and stocks.
A chart of prices and volume represents all the past decisions taken by market participants (buying and selling). This information will, in turn, affect future participant decisions in two ways:
There are three possible trends:
Sometimes traders also use the terms “Bearish” and “Bullish” to refer to a trend. Bullish comes from the bull, who strikes upwards with its horns, thus pushing prices higher and bearish comes from the bear, who strikes downward with its paws, thus driving prices down.
Movements are not linear, the price will face resistance as it goes up or support as it goes down.
When the resistance level is broken it usually becomes a support level and vice versa.
In technical analysis, support is often used as an entry point and resistance as an exit point. In the case of strong trends, the price can go through support/resistance without stopping.
If you’d like to go one step further in your analysis, here’s what analysts often look at:
These charts display bars that are known as ‘candlesticks’. A candlestick's shape varies based on the relationship between the day's high, low, opening and closing prices.
Candlestick charting is based on a technique developed in Japan in the 1700s for tracking the price of rice but a suitable technique for trading any liquid financial asset. Candlestick can be studied individually (simple patterns) but more often used in groups (Complex patterns). The purpose of Candlestick charting is to determine the market trend.
An average of the closing price of the stock over a specified number of period.
Bollinger Bands display a graphical band (the envelope) with a simple moving average in the middle. The width of the envelope expresses the volatility.
Volatility refers to the rate at which the price of an asset can increase or decrease. A higher volatility means that the asset can potentially fluctuate rapidly within a larger range of value.
Moving Average Convergence Divergence (or MACD) is a trend following indicator that looks at the combination of two moving averages:
These two moving averages are combined to identify what is the current trend and if there is a change in the momentum.
The MACD lines displayed below can be interpreted as follows:
One of the most effective means of influencing the public is media. Breaking news and headlines may instill panic and fear in a mass manner, as well as euphoria. The impact of news on the cryptocurrency market is perfectly illustrated by the high-profile events in the world. In September 2017, the Chinese authorities have banned ICO which led to the collapse of the bitcoin price — from $ 5000 to $ 3000. However, there is always another side of the coin, Bitcoin spiked when eBay and Dell said they considered accepting Bitcoin.
With articles like the one above, we aim to help you better understand the Hourly Crypto Asset Analysis , available to you in the Learn section in the Marketplace of our SwissBorg app.
No market lives outside the events that shape the world. That's why, for each token we provide relevant, updated news that can impact the cryptocurrency market. Our goal is to grow and educate our community.