Every Cryptocurrency is curious to buy cryptocurrency in India and abroad. This new digital phenomenon has become so popular among the masses across the world. The underlying factor which has been responsible for its growth is Bitcoin. Yes, this is the only cryptocurrency which made its debut on 3rd January 2009 by its pseudonymous founder, Satoshi Nakamoto. Now being a crypto enthusiast, you need to know every aspect of cryptocurrency, be it Bitcoin, altcoins, blockchain ledger, or any other prominent part of the crypto world. But today, we are going to put our emphasis on the technical analysis of cryptocurrency. Now, what is technical analysis? How does it work? Well, if you don’t have enough idea about it, then know it today in this blog.
What Do You Understand By Technical Analysis?
By technical analysis, we can understand it as examining the trends via statistics, collected from volume data and historical price, to classify trade opportunities. This technical study revolves around noticing movements of price, with the help of analytical tools to analyze asset’s strengths and weaknesses. The application of technical analysis is done to any security with ancient data including commodities, forex, stocks, and even cryptocurrencies.
Working Of Technical Analysis
Besides knowing the basic concept of technical analysis, it is essential to know about its working. A technical analysis comprises volume and price chart signifying decisions by market participants taken in the past. This information impacts decision of future participants in two manners:
Psychological
This form of technical analysis reveals about your past effects and your current focus for the upcoming circumstances. We can understand like this, some traders emphasize the price of an asset, bought by them. When the price declines, they come with the decision to sell the asset at times it crosses break again.
Spontaneous
Some traders can analyze patterns of charts and the ongoing trends that seem very natural. They take steps according to selling and buying. If the majority of participants adhere to a similar tactic, then it raises the possibility of chart patterns adhering to possible results. This way the trend will increase more with the joining of many participants.
OHLC Charts
Besides understanding technical analysis, you need to understand about OHLC charts. OHLC stands for Open-High-Low-Close. These charts show the bars known to be as ‘candlesticks’ which reveals the connectivity between day’s prices that are either low, open, close, or high. There are two main candles associated with it, these are:
Bearish candle: this appears in black or red colours indicating the situation when closing falls under the opening.
Bullish candle: this appears in white or green colours indicating the situation when closing is upwards to opening.
Candlestick Charting
This type of charting belongs to the technical analysis which is prevalent in Japan since the ancient period. This technique was used for finding rice prices. This type of technique is calculated on simple patterns, but can also vary in complicated groups. The sole objective of Candlestick charting is to regulate market trends.
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