What is Technical Analysis?
Technical analysis could be defined as a method or a pattern of analyzing the crypto market in a chart, this is done in a way by which the next possible movement can be predicted due to the similar past movement we have witnessed in particular market behavior, this could be in a series of patterns or the past market volume could be used in analysis what is likely to happen next.
The Technical analysis has been saving traders for a while, as it helps in identifying possible trends or a possible retracement that is expected to occur in the market, and this gives traders an edge ahead of the market movement.
Technical analysis involves multiple methods of analysis, some traders could make use of Volume or Divergence indicators to predict the next movement, and some as well could make use of patterns, such a case of, head and shoulder patterns, falling wedge patterns, and others, all these are done to forecast what could happen next and as well to be on a safer side of the trade.
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it gives traders an edge on what is likely to occur in the market and with this, a trade could be placed ahead of the market arrival.
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Helps traders in setting their target and exit level, with T.A, traders can determine where their target level is to make a profit and also identify when to exit the market in case the market breaks the Analysis.
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Boost traders' confidence in a trade: when the T.A is properly applied, it gives traders full confidence in the next market behavior which thus makes them stay ahead of the market.
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Eliminate unnecessary risk: with Technical analysis, traders can simply identify a wrong or fake trend and as well exercise patience to look for a good entry.
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Helps in identifying the support and resistance regions as well.
Some of the components of Technical analysis.
The followings are the component needed for a proper technical analysis to stay ahead of the market moves and forecast its next movement.
Chart - the First importance is to pick the chart type that you found yourself to be comfortable with, there are several such as Bars, candles, Heikin Asi, Moving lines,s, and others, to perfect your analysis, you pick the one that you think best works for you, although the Candles Chart is most common, as it uses the green candle to depicts the buyers and uses the reds to depicts the market sellers.
Timeframe - Another thing to be considered is the Chart time frame, which could be used to depict the market movement of the past time frame, you could make use of a lower time frame in the scalping market as this gets you to see the past movement of the short market frame, but when it comes to long term trading, I make use of the Daily time frame, so I could witness the past days movement of the market.
Identify Support and Resistance Zones - One thing that is most importantly in technical analysis is to identify the market support and resistance zone, as we could see that in the resistance zone, the market stops rising it starts falling, while in its support zone is when it bounces back from falling and start rising.
When these zones are identified, traders can then predict and know the exact trades to place, as you are expected to buy when the market hits the support zone, as as well expected to sell when the market is at its resistance level.
Here comes my conclusion on the topic: Crypto Market Technical Analysis, where I have as well identify the component needed to analyze a market, and as well explain the chart types and the best frames for analyzing trades.
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