Is-it-possible-to-apply-Technical-Analysis-to-Cryptocurrency-markets Is-it-possible-to-apply-Technical-Analysis-to-Cryptocurrency-markets

What does technical analysis mean?

This type of analysis looks at the historical data of an asset and looks for patterns in price movements in the past.

It also takes into account the volume of trading in securities.

Technical analysis can be used for any type of financial instrument (stocks, bonds, commodities ), if there is historical data on the desired asset.

Technical analysis is often used for short-term investments because it does not take into account the future prospects of the company’s potential, but is based only on the history of the asset.

Technical analysis is useful for those who calculate the daily strategy for intraday trading.

Such an analysis is carried out using statistical methods and charts, with the help of which certain patterns can be determined.

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What is technical analysis?

Technical analysis is based on the following assumptions:

  • All relevant information is already included in the prices;
  • Demand and supply determine the market value;
  • Past performance is an indicator for predicting future price movements;
  • Hidden patterns and trends can be revealed in the history of an asset;
  • Investor sentiment can be predicted;
  • There are trends in market behavior;
  • In the case of each specific asset, the behavior of investors can be repeated.

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Types and indicators of technical analysis

There are many different types of technical analysis depending on its nature and properties.

First of all, the analyst can use different types of charts such as bar charts, line charts or candlestick charts.

Charts show price movements in different periods of time – one minute, five minutes, an hour, a day, a week, a month or a year.

In addition to charts, the analysis uses various types of indicators.

A trend line is used to look for trends in past stock prices.

The Fibonacci retracement is an indicator that can be used to find support and resistance levels.

Many other indicators are also available in technical analysis.

All of the above components of technical analysis are used in the process of developing an investment strategy.

They can be useful for identifying patterns and recurring trends in the price movement of a stock or other instruments.

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Technical analysis and fundamental analysis

Unlike technical analysis, fundamental analysis is an in-depth analysis.

It evaluates an investment decision based on the financial statements of the company, industry, competition, future prospects, etc.

It is more expensive to complete but can help in the process of assessing the true value of the company or investment.

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