As the adoption of cryptocurrency speeds up, many people are interested in getting better educated in “reading charts”. Technical analysis is a fancy term for watching indicators on price action of stocks, cryptos and even NFT's, and in doing so, trying to predict the upcoming moves. That being said, no one can see the future, and indicators often deceive but knowing the basics of technical indicators will help anyone make an educated guess where price action may be headed. This blog is intended to give you an introduction.
At the core, trying to find supports and resistances, and determining mid to long term trends, will be important keys, if you are someone who enjoys protecting and growing your investments.
Starting with the basics, Moving Averages are exactly what they sound like. They show a line within a chart that represents the average of the last days of trading. With this indicator you can get averages on the last 7 days of trading the last 50 or 200, pretty much any time frame you set your preference to. After you understand moving averages, check out an indicator called the MACD- Moving average convergence divergence. (Link below) Next up, RSI- relative strength indicator can tell you, in essense, if people may be selling or buying too quickly.
Thirdly, the PSAR – parabolic stop and reverse is an indicator I like, that gives some indication at what point, entries and exits might be executed to increase your chances of making good buys and sells. Finally, because of Fibonacci; also known as Leonardo Bonacci, a mathematician from Italy, many traders and investors use his special sequence to predict stock moves. The fibonacci sequence has become a very important method of using numbers in the Golden ratio to forecast price action movements. It is actually a very simple math sequence that exists in nature. This indicator definitely takes some practice, but can bring about favorable trades if used correctly. Another indicator I like is the the Ickimoku cloud. It gets a little “technical”, and there’s a video linked below if you’d like to tackle it.
One more point to make, indicators are great, but it has to be said that geopolitical news, interest rate moves, company successes, company failures and even natural disasters, to name a few, have huge impact on price movements. Basically, technical indicators can only go so far in this ever changing world.
I hope you enjoyed this quick read and if you are ready to dig into some videos, please check out this Twitter thread I put together with some informative videos that I hope will help.
It can get confusing :
“If that relative strength index stays bullish like the moving average convergence divergence, that parabolic stop and reverse is flipping on volume and this price action could retrace those fibonacci lines” WUT?
Acronyms: •SMA simple moving average
•EMA exponential moving average
•MACD moving average convergence divergence
•RSI relative strength Index
•PSAR - parabolic stop and reverse •Fibonacci - Fibonacci sequence
There is great education about technical analysis from Investopedia at this link, if you’re interested in digging in deeper. https://www.investopedia.com/technical-analysis-4689657
Thanks for stopping by.
What are your favorite indicators?
-CryptoRick ✌️
• This is educational content only•
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