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How to see trends using the price analysis in cryptocurrency
In the world of cryptocurrencies, trends are a key aspect of investing. Because many new coins enter the market every day, the signal separation from the noise can be difficult. However, one effective way to detect trends is the analysis of the price. In this article, we will examine how to use the price analysis of cryptocurrency trading to identify trends and make informed investment decisions.
What is a price analysis?
The price campaign refers to the visual presentation of the price of the currency, including its ups, falls, open, close and size. It is a key tool for traders to analyze the market and predict future price movements. The analysis of the price shares spreads data into smaller units, emphasizing key patterns and trends that can be used to identify potential purchase or sale signals.
How to use a price analysis in cryptocurrency trade
To see trends using the price analysis, follow the following steps:
- Open the trading platform
: Choose a reliable cryptocurrency trading platform such as Binance, Coinbase or Kraken to start price analysis.
- Create a chart
: Open the commercial platform chart interface and create a new table with a specific time frame (e.g. 4-hour, 1 day).
- Identify patterns : Look for patterns in price, such as
* Bollinger Bands (BB): a combination of two medium -sized, where one is wider than the other.
* Medium movable (ma): two or more lines that converge, creating a single line.
* Relative force indicator (RSI): measure of market variability.
- Analyze Directionality : Study the direction of price traffic:
* Liquid: prices are rising up, which indicates potential growth.
* Barish: prices fall down, which indicates a potential decline.
- Look for terms of purchased/sold out : Identify when prices are purchased or overtaken, using indicators such as RSI and Bollinger Bands:
* Conditions purchased: prices are above 80, which indicates transplantation.
* Conditions sold out: prices are below 20, which indicates underestimation.
How to use indicators
Take into account the following indicators for the analysis of the price:
- Relative strength indicator (RSI) : measures market variability and identifies when it is bought or sold out.
- Bollinger bands : A combination of two average movable, where one is wider than the other, which indicates potential trends.
- Medium mobility Disgustion of convergence (MacD) : identifies changes in the shoot, such as a stubborn signal.
Example
Suppose we want to analyze the cryptocurrency market for Bitcoin (BTC). We open the chart of our trade platform and identify the following pricing patterns:
- A recent trend with a Bollinger Bollinger band 20 units above the central line.
- RSI reading of 30, indicating the purchased conditions.
- MacD signals on both sides, showing potential buy and sale signals.
Based on this analysis, we decide on a long position (purchase) when the price breaks below the lower Bollinger band, which occurs at 15:45 UTC. If RSI reading is still carved out, we should consider selling a long position before it reverses its trend.
Application
Analysis of price action is an effective tool for detecting trends in cryptocurrency trading. By studying price patterns and analyzing directions, indicators and other visual representations of market data, you can identify potential buy or sale signals. Remember to always use caution and set STOP-LOSS orders to protect the investment.
Taking into account this approach to trade strategy, you will be better prepared to move around the complex world of cryptocurrency trends and making informed decisions about where to invest.
