Calculation of the currency value on the exchange according to chart
A large number of investors are extremely skeptical about the use of techniques that allow calculating the exchange price of the crypto currency on a chart. Technical analysis in all financial markets is used quite actively.
However, it is worth acknowledging that the sense of applying technical analysis for trading in digital currencies still exists. However, when carrying out forecasting of price movement of this type, it is worth remembering about the specific liquidity of stock exchanges.
Today, we can say with absolute certainty that the quotations of Bitcoin coins are directly dependent on materials published by the leading media. Therefore, investors, make forecasts based on news.
Given this specific feature, it is not difficult to assume that an investor using technical analysis tools can more accurately approach forecasting and achieve more than a trader trading by news.
Methods of crypto-currency technical analysis
The number of technical techniques is unusually extensive. However, all the leading directions are divided into additional subgroups. In general, it is possible to single out a set of basic categories:
- Working with key levels (support and resistance).
- Application of indicators.
- Graphical patterns.
- Candlestick analysis (reading candlestick patterns).
- Statistical parameters – the trading volume, the ratio of open applications, etc.
Naturally, each class of technical analysis is of some interest to the investor. As practice shows, qualified investors use combined strategies, compiled on the basis of several categories of technical analysis. Such collaboration increases the accuracy of the signal.
How to use support and resistance levels for crypto currency trading?
The cost of cryptographic coins, constantly changes, in fact, it is exactly the way the chart on which the maximum and minimum values appear is formed. The so-called peaks and valleys demonstrate local price extremes.
If you draw a line along a series of maximum or minimum values, then such a line will become a resistance / support line. This price value is considered a harbinger of a possible reversal.
Really powerful and strong levels of support / resistance are usually formed in those sections of the chart, where there are impressive accumulations of applications for the purchase / sale of a financial asset.
Simple figures of graphical analysis
The most simple and understandable pattern for the use in the cryptographic coins trading course are the figures of technical analysis. The construction of such models is carried out according to simple laws of price movement.
Figure – a kind of image that describes the transformation of the value of a financial asset. Based on the constantly repeating graphic models, investors build the most accurate forecasts for the subsequent movement of quotations.
As an example, let’s consider a model called “Head and Shoulders,” which can be usually seen due to a dynamic and protracted market trend. The pattern represents 3 consecutive maxima, the middle is the head (the highest), the lateral elements are the shoulders, are approximately at the same level.
Directly this model indicates the conclusion of trading operations for sale. However, there is also an inverted variation of this pattern, but in this case, it is necessary to conclude trading operations, oriented on purchasing.
Features of the use of candlestick analysis elements
On the candlestick chart, all possible combinations, which can be regarded as a clear signal for the conclusion of a trade operation, are formed. The main thing is to learn how to read candlesticks correctly, and also to know which candlestick patterns are formed on the cost charts. Let’s consider, perhaps the most popular configuration.
The Three Advancing Soldier model is a common pattern that consists of three successively growing white candlesticks, while the cost of closing each element is higher than in the previous one. Such a figure is considered to be bullish, hence, indicates the retention or the beginning of an upward market trend.
If after formation of two clearly expressed white color candlesticks, the third on their background seems too small, then there is a probability of formation of short-term correction. In such situations, it is necessary to somewhat shorten long positions, and also consistently close the current trading operations.
Specificity of the use of indicators in the digital currency exchange
The vast majority of strategies are built on the basis of the most popular indicator – moving averages. This algorithm performs a mathematical averaging of the value, which is taken for the period of time set by the investor.
In the process of changing the direction of quotations, the value increases or falls, which allows the trader to promptly reveal the general trend of the financial asset. As a result, tracing the movement of the moving average investor generates a forecast.