Basics of technical analysis for trading on the stock exchange bitcoin
The main issues for the trader are the following three:
1. Movement of prices in what direction?
2. How high they will rise or fall as low?
3. When the situation will change in the opposite direction?
One of the main tools that may suggest answers to them is technical analysis.
Technical analysis is an attempt to predict the movement of prices, based on the analysis of changes that have occurred in the past. For this purpose, a great variety of charts and graphs showing price fluctuations at different time intervals.
In search of the answer to the first of the major responses, the trader determines the trend.
Trend – trend price indices move in a certain direction for a certain period of time.
Actually, based on the direction of motion parameters can distinguish two main trends:
1. Ascendant (also called the “bull”) – when prices are rising and the prevailing optimistic … until the first sharp, often unexpected, falling indices.
2. Down (aka “bear”) – when prices fall, and all beginning to embrace optimism … that at a certain moment of change in the desperate hope that will start the uptrend.
There are cases where prices fluctuate so that is not shown, none of the trends. This “no trend” is actually also a kind of trend, which is called “flat”.
Depending on the duration of trends are divided into long, medium and short term.
In the case of Bitcoin, the focus should be given to short-term (at the expense of the hours and days) and medium term (through for weeks or months) trends.
To determine the trend, there are several indicators. We will focus on the prevalence of: moving average (moving average, MA).
the last period of time. That is, the moving average does not predict the future development of a trend, and confirms and visualizes the trend that has taken place to date. Depicted in the form of a curve. Draw conclusions based on the information – the work of the trader.
You can set different time periods for the indicator MA. A common practice is the use and analysis of the interaction of several moving averages, for example, one of the lines MA will show the changes in a week, and another – for the month. Usually, when they intersect it indicates a change in trend.
Another common and important tool for the analysis and prediction of price changes in the bitcoin exchange – Japanese candles. Of course, not literally …
Candlesticks – a way of visual representation of price changes for a certain period of time.
It looks like a candle: she “candle” is called the “body” (the price range in the gap between the opening and closing of trades); often are at the top and bottom of the two “wick”, which are called “shadow” (the minimum and maximum price for a specified period of time).
Candles can be light (white or green) and dark (red or black) color. Light the candle shows that the closing price over the opening price, that is, they mean higher prices. Black candles mean falling prices, in which the closing price is less than the opening price.
Most often, for the convenience of interpretation of information, Candlestick and line (or lines, responsible for different periods of time), the moving average are on the same graph.
Of course, The above information is only the first step in the study of technical analysis and its application to trade bitcoin on the exchange. But based on it can begin learning to read charts and predict further development of events.
You can try your hand, for example, on this site https://bitcoinwisdom.com. It shows changes in the indices of different exchanges (select the most appropriate at the top of the site) in real time.