How to see trends using the price analysis in cryptocurrency
The world of cryptocurrency has witnessed a significant increase in popularity over the past decade, with many investors gathering on trade and speculates on the market. However, identification of trends in the space of cryptocurrencies can be a challenge due to the complex and constantly evolving nature of these markets. In this article, we delve into the way in which price analysis can help traders and investors see trends in cryptocurrency.
What is a price analysis?
Price analysis (PAA) is the basic approach used by traders to analyze the price movement of assets on financial exchanges. It includes the study of the trend and pricing movement patterns to make conscious commercial decisions. PAA takes into account various technical indicators, such as moving average, RSI bands, Bollinger bands and others, in addition to traditional chart designs, such as trend lines, and support and resistance levels.
how the price analysis of the price works
To see trends with PAA, traders take these steps:
- Choose trade range
: Identify the upper and lower boundaries of the commercial range, which is usually characterized by a significant price movement.
2.
* Reversal: when prices go through the level of support or resistance, which indicates a potential reversal trend.
* Breaking: When prices reach a new level, then immediately reverse, signaling a strong growth growth.
* Head and arms: a classic chart pattern that may indicate a continuation of the trend or reversal.
- Calculate the indicators : Use technical indicators to measure strength and direction of price movements. Common indicators used in PAA include:
* Medium walking (MA): Average prices in a certain period, indicating a trend rush.
* RSI: Relative strength indicator that measures the size of recent price changes.
* Bollinger bands: a variability indicator that performs two medium movement with a distance between them, representing a range at which prices probably move.
4.
Trend identification in cryptocurrency
Using PAA in cryptocurrency, traders focus on identifying trends and priced movement patterns over time. Here are some specific tips:
- Look for reversal : Identify when prices go through the levels of support or resistance, signaling a potential reversal trend.
- Analyze a breakthrough patterns : Look for groundbreaking patterns on the chart, such as a strong upward trend after withdrawal or weak from the bottom after returning.
3.
Example: detection of trends using a price analysis in Bitcoin
Let’s assume that in the last few months we will analyze the Bitcoin price chart and identify a strong reversal of trends from November 2019 to January 2020. The chart shows a significant breakthrough through the levels of resistance at USD 30,000, followed by strong growth growth.
Using PAA indicators such as RSI and Bollinger ranges, we calculate:
- Medium walking: the short-term (20-speed) is almost 27,500 USD, while the long-term (50-speed) is about USD 38,000.
- RSI: RSI in 70 indicates a strong condition for purchase, indicating that prices are due.
- Bollinger teams: The price is trading in the traveling range of 20-speed from USD 28,000 to USD 40,000.
Based on this analysis, we identify the potential reversal of the trend and start trading activation with a strong growth trend. Over time, we still monitor the chart and adapt our transactions accordingly, taking into account various market conditions and risk management strategies.
