Technical evaluation: Use diagrams to make decisions in cryptocurrency
The world of cryptocurrency has recorded rapid growth and volatility over the years. As a result, dealers and investors have turned to technical analysis in order to make sound decisions about the direction of the market. The technical assessment includes the use of diagrams, indicators and other visual tools for analyzing price movements and patterns to predict future trends.
What is technical evaluation?
The technical evaluation is a method for evaluating the value of a security or financial value based on its past performance, and not on its intrinsic value, which is determined by a fundamental analysis. It requires the analysis of historical data, diagrams and patterns to identify trends, support, resistance and other important levels with which well -founded decisions can be made.
How to use diagrams in the technical assessment
Diagrams are the basis for the technical assessment in cryptocurrency. They offer a visual representation of price movements over time and make it possible to analyze dealers and investors, patterns, trends and other characteristics of the market.
Here are some ways to use diagrams in the technical assessment:
- Identifying support and resistance levels : Diagrams can help to identify support and resistance in which prices tend to be back or rash down or jump.
- Analysis of the commercial volume : The high trading volume often shows a strong purchase pressure, while a low volume may indicate weak sales pressure.
- Search for patterns and trends : Identify repeating patterns and trends in the diagram, e.g. B. triangles, wedges and school shoulder formations.
- Use indicators : indicators such as moving arecesages (MA), relative strength index (RSI), Bollinger tapes and others can provide additional information on price movements and help to identify potential areas of support or resistance.
Popular diagram pattern in cryptocurrency
Here are some popular diagram patterns with which dealers and investors make decisions:
- Triangular pattern : A triangle is a common pattern in which the prices form a small area before they are continued.
- Head and debt formation : A head and shoulder formation occurs when the price reaches its lowest point, forms a “head” and then jumps into a “shoulder” again.
- wedge
: wedge resemble triangles, but have two different sides: a small area bound area (“body”) and a larger area.
- CrossOvers : Crossovers occur when the price of a security is over that other security, which often indicates potential changes in market dynamics.
Indicators in cryptocurrency
Indicators are mathematical calculations with which the price movements are analyzed and potential trends or patterns are identified. Some popular indicators used in the technical assessment are:
- Moving average values (MA) : A sliding average is a line that represents the average value of security over time.
- Relative strength index (RSI) : The RSI measures the size of the latest price changes to determine overbought or oversold conditions.
- Bollinger tapes : Bollinger tapes are a variation of the standard -MAs with which the volatility are displayed and potential trends are identified.
Tips for using diagrams in cryptocurrency
Here are some tips for the effective use of diagrams in the technical assessment:
- Display your diagrams : Use several diagrams to analyze various markets or asset classes.
- Combine diagrams with basic analysis : Combine the technical analysis with basic analysis to get a comprehensive understanding of the market.
- stay on the latest stand : keep your diagrams up to date, since new data and events can influence the direction of the market.
- be a patient : The technical assessment is not a precise science; Be patient and give diagrams time to mature before making decisions.