Can Technical Analysis Be Used In Crypto? I Say Yes!

Dear friends! I’m going to start a new serie of posts where I would like to show you how different technical tools work in crypto markets. The main reason for this is: some of you think that the crypto markets are unique and the standard tools of Technical Analysis don’t work properly.

Based on my experience I would like to say that any tools which are used for making analysis in traditional markets can also be used for cryptomarkets. Knowledge in Technical Analysis allows to make stable profit in the long run in all financial markets. The same goes about crypto markets. I will show you support and resistance lines, levels, chart patterns, candlestick patterns and the main indicators. And you will see possible signals which you could get. One thing I should note for you. I’m going to use Bitcoin and the top altcoins markets for the examples. Any shitcoins are not interesting because they have very low capitalization and they can be manipulated very easily.

Before we get the first examples, let me remind you what is TA and the main ideas. You will see why it is cool!

Here are some definitions and principles from Wikipedia. I wouldn’t be able to say it any better:
Technical Analysis (TA) - what is it?
It is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.

Technicians employ many methods, tools and techniques. Technicians using charts search for archetypal price chart patterns, look for forms such as lines of support, resistance, channels. Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation.

A core principle of Technical Analysis is that a market's price reflects all relevant information impacting that market. A technical analyst therefore looks at the history of a security or commodity's trading pattern rather than external drivers such as economic, fundamental and news events. It is believed that price action tends to repeat itself due to the collective, patterned behavior of investors. Technical Analysis focuses on identifiable price trends and conditions.

Principles of TA:
- market action discounts everything
Based on the premise that all relevant information is already reflected by prices, technical analysts believe it is important to understand what investors think of that information, known and perceived.
- prices move in trends
Technical analysts believe that prices trend directionally, i.e., up, down, or sideways (flat) or some combination. The basic definition of a price trend was originally put forward by Dow theory.
- history tends to repeat itself
Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them. To a technician, the emotions in the market may be irrational, but they exist. Because investor behavior repeats itself so often, technicians believe that recognizable (and predictable) price patterns will develop on a chart. Recognition of these patterns can allow the technician to select trades that have a higher probability of success.

Technical Analysis is a really powerful tool for making money. You have to learn it if you want to trade properly and get profit in long run.

So, the next post will be about signals from support and resistance levels.

Please, note: I will not give you the theory of what is support and resistance levels, how to draw them properly. I will show you how they work with crypto. You should learn the theory by yourself in order to understand what I will be talking about.