Using technical analysis and chart indicators is a useful way of improving your investing and trading results. To master technical analysis, it is essential to understand what is important and what is not.
For many people, using technical chart analysis is a key component of their cryptocurrency investing strategy. A lot of investors are afraid that learning technical analysis is too complicated.
To learn the principles of technical analysis, which will be discussed in coming articles, you need to be aware of these useful tips;
Widen the Time Frame
Identifying longer terms when it comes to the token’s price is essential and considered as the fundamentals. It will also help you to understand how and why the price moves . It is quite easy to look into it myopically, but this doesn’t help you identify the signals regarding when to move on a trade.
With this, start your technical analysis by using yearly, monthly and weekly charts and then continue working with intraday charts. Through this technique, you can easily identify the entry and exit points for your investments.
Use the Trend
This is one of the well-known axioms. Some traders have a fixated idea and do not admit their own mistakes. This is why it is important to minimize every possible. When fighting a trend, be very careful and decide if you are going to be a long-term investor or a short-term trader.
Don’t focus on one Indicator
Literally, there are thousands of indicators that exist but they are grouped into different components: volatility, trend, momentum and volume. Knowing how each of these categories differ is the first step towards diversifying your analysis. Depending on a lot of indicators is fine but leaning only on the sheer amount of indicators is not good. It will just make your analysis more complicated. Therefore, you need to learn which among these indicators are worth investing your time in.
Be aware of the resistance and support
This is considered as the central aspect of technical analysis. The support is where the price bounces back from a fall many times in a row, while the resistance is where the prices seem to constantly retract after a rise.
Every indicator is directly linked to the repetition and the phases of the retraction and growth of the price. You need to make a broad observation on how the price has evolved and identify where the levels of support and resistance are. Properly identifying the basic movements of the price will help you improve your ability to see the trend and take good trading decisions.