Saturday, May 25, 2024

Beginner’s guide to Technical Analysis

The crypto world looks like another world, most especially when talking about the various cities such as NFTs, fundamental analysis, technical analysis, crypto trading spot, futures, and leverage, among others. One of the words that seem unknown yet known is technical analysis. 

Technical analysis is not a stand-alone concept in cryptocurrency. It is one type of analysis in crypto trading. 

What is crypto trading? 

Crypto trading is buying and selling cryptocurrency to make a profit. 

An old-age phenomenon is that crypto trading is all about buying low and selling the crypto when the price increases. 

This is just a type of trading called spot trading, whereas there is another type known as futures trading. 

Futures trading is a derivative contract agreement to buy or sell a specific commodity asset or security at a set future date for a fixed price. 

In simple terms, futures trading is price speculation that can either be a buy or sell. 

Nevertheless, analyzing the crypto market is necessary for both spot traders and future traders though there’s a difference. 

A spot trader is looking for an opportunity to buy at a lower price and sell at a higher price while a futures trader is looking for an opportunity to either buy or sell in the market. 

Irrespective of the market movement, a futures trader has the tendency to make money. 

This makes technical analysis widely linked to futures trading. 

What is technical analysis? 

Unlike bitcoin, technical analysis did not come into being as a result of blockchain technology. 

It is as old as man and it is used in the financial market at large

To an asset management company, technical analysis is a trading discipline and principle to evaluate investment and identify trading opportunities in price trends and patterns seen on charts. 

In corporate finance, technical analysis is a form of investment evaluation that analyzes past prices to predict future prices. 

Generally, technical analysis is a means of examining and predicting price movement and financial market by using historical price charts and market statistics. 

Technical analysis is based on the theory that future prices can be determined by looking at historical price movements. 

Simply put, whatever has happened in the past can be repeated in the same manner. 

Rules of technical analysis

There are three basic rules in technical analysis. 

The market discount everything

Technical analysis, unlike fundamental analysis, does not focus on macroeconomic and political events. 

Fundamental analysts decide on what to buy and when to buy in relation to economic news while technical analysts believe that any event occurring in the world will be factored in the price. 

Fundamental analysis is technical analysis overtime” , that is; what comes out as economic news is a validation of technical analysis. 

Price moves in trends

Another rule is that price moves in trends. This basically means that movement may continue rather than reverse its direction. 

This is backed up by the saying that the “trend is your friend“. 

Just like what we’re seeing currently in bitcoin. 

Bitcoin has been in a downward trend since the beginning of the year. 

History repeat itself 

Without this rule, technical analysis is not complete. It is believed that charts tend to form shapes that have occurred before therefore analysis of patterns help technical analysts in predicting future market movement. 

Is that all about technical analysis? 

No. You can schedule a call with the Crypto Smart team to learn more about technical analysis. 

About Crypto Smart

Crypto Smart is a B2B Crypto Asset Management company founded in January 2021 by Karla Obakpolor, a blockchain business developer and Algorand ambassador in 2020.

The company offers fast and secure services which are based on a well-encrypted system with 24/7 customer support services. It has grown from offering its services to individuals to companies and major enterprises as well as providing crypto education through various crypto courses. 

Crypto Smart upscaled to the Algorand blockchain and offers blockchain products which include SmartChange; a cross-chain P2P marketplace, Bitsave Protocol; a SaveFi protocol that combines savings with DeFi. 

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