How to Study the Cryptocurrency Market


Once you have your cryptocurrency, you should study its price and market trends. This can be done by studying the volume of cryptos and their prices. If the volume is high, the crypto is hot, whereas if it is low, it is a bear market. You can also read cryptocurrency news to learn more about the crypto market. You may not have enough time to do these tasks, but these few steps will help you understand the market better.

Technical Analysis

Using previous price action data and mathematical indicators, crypto technical analysis attempts to forecast trends and predict future prices. Markets follow specific patterns, and trends tend to stick around for some time. On the other hand, investors want to buy when prices are low and sell when prices rise. This is where technical analysis comes in handy. It helps you identify low and high price levels before they occur. But there is much more to technical analysis than just looking at past data.

Unlike traditional markets, cryptocurrency projects are often less established and have limited information. These assets are still in the start-up phase, so research is critical. You can prioritize which assets have good prospects by applying fundamental analysis. After performing your fundamental analysis, apply technical analysis to assets that pass the test.

Once you understand the basic principles of technical analysis, you can use them for trading successfully in the crypto market. There are many methods and strategies to use this tool, but the main ones are those mentioned above. Candlestick charts, which originated in Japan more than a century ago, visually depict the size of price movements. Generally, positive candles are colored green, while negative ones are colored red. Candlestick charts allow you to identify simple patterns, such as bullish and bearish engulfing patterns.

Trendlines identify support and resistance levels. A support or resistance level is a price level where buyers are expected to purchase or sell a cryptocurrency. A resistance level may also act as a support level. This pattern is known as a golden cross. This setup occurs when the short-term moving average moves above a long-term moving average. The opposite is valid for a downward trend. Trend lines can show a variety of technical analysis setups.

Candlestick Charts

A daily candlestick chart consists of one or more candles. The candlesticks are colored based on their open and closing prices. It is important to remember that these prices may not necessarily be the same as the price of the coin. The candlesticks also show indicators like Bollinger bands and moving averages. This information is beneficial in determining trends in the market. Let’s look at an example of a daily candlestick chart below.

A candlestick is a graph that represents a specific period. It looks like a thick-colored line with a thinner line coming out of it. The candle’s wick or upper shadow shows the timeframe’s highest and lowest price levels. Candlesticks are also referred to as OHCL charts. To study the cryptocurrency market using this chart, you need to know what a candlestick looks like.

To study the cryptocurrency market using a candlestick chart, you must understand how to read the first one. Candlesticks are often grouped by the time of day and the price of one coin. You can also set a time frame to view data over a month’s worth. For example, you may want to use a 15-minute time frame in your analysis. In this case, you’ll want to focus on the candlesticks forming at the end of a trend.

One of the most critical aspects of candlestick charts for studying the cryptocurrency market is its ability to highlight trends. Candlesticks are a potent trading tool. Not only do they reveal the price action of the trading pair over a specific period, but they also show how the market reacts to changes in sentiment. You can study these trends to find profitable trades. So, get started with cryptocurrency market candlestick charts today.

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Dow Theory

Many people have embraced the Dow Theory for studying the cryptocurrency market. This method is based on the idea of efficient markets and suggests that the different market indices should confirm each other until a trend reverses itself. The theory was developed by Charles Dow, the first editor of the Wall Street Journal, and is used to analyze the market. It aims to identify trend patterns in individual stocks by studying the overall market.

The theory identifies three essential phases in an asset’s lifecycle. The first is a decline, during which the valuation is low, and the second is a rising trend. During this period, intelligent investors will buy. They should remember the golden rule of investing: “Be greedy when others are fearful.” The second is a rise. These three stages are optimistic and bearish, and the theory suggests that the two will tend to follow one another.

When looking at the primary trend of a cryptocurrency, it is vital to consider the market’s volume. A high volume will indicate that many people are buying the currency. A low volume, on the other hand, implies that trading activity is weak and the market is likely to turn down. Ultimately, the goal is to find the primary trend and follow it. With a high trading volume, you can take advantage of that trend to gain a significant profit.

The Dow Theory for studying the cryptocurrency market is based on the efficient markets hypothesis. The theory suggests that an asset’s present value reflects all the information publicly available to its market participants. Individuals may not understand all of this information, so they discount it as a risk premium. In the case of cryptocurrencies, however, the value of a cryptocurrency will reflect all publicly available information, including past, present, and future failures.

Relative Strength Index

If you are looking to make money in the cryptocurrency market, you should start by learning to use the Relative Strength Index (RSI). This simple indicator has diverse applications in the crypto market, as it can be applied to any coin offering and timeframe. It can be used to trade reversals, range-bound markets, trending markets on price retracements, and even sideways markets.

The RSI indicator is used to gauge short-term momentum in the market. It shows how strong the cryptocurrency has been trading in the recent period. Calculating the pace and direction of recent price movements helps you time your trades. Using the RSI to analyze the market can help you identify swing trading opportunities and overbought or oversold conditions. The RSI indicator can also identify overbought and oversold conditions and act as a buying or selling signal.

RSI Calculation

The RSI is a momentum indicator that calculates a single line between 0 and 100. The higher the number, the more overbought or oversold the asset is. A high RSI reading above 70 is considered overbought, and a low reading below 30 is considered oversold. RSI was developed by Welles Wilder Jr. in 1978 and is now among the market’s most widely used public-domain indicators. While there are many other indicators for the cryptocurrency market, the RSI remains one of the most accurate and popular.

The RSI is an effective way to analyze the crypto or asset market. It allows you to identify critical areas of support and resistance. Support is the price below which the market struggles to dip while resistance is above it. Using the RSI, you can identify a trend and profit from it before it breaks through the support or resistance levels. This can be a great way to predict the market’s future direction.

The Relative Strength Index was first introduced in 1978 by J. Welles Wilder. He initially worked as a mechanical engineer before switching to trading stocks. Wilder compiled his research into mathematical formulas and wrote the book New Concepts in Technical Trading Systems in just six months. The book remains a popular resource among chartists. This tool is straightforward to use. So, learn how to use the Relative Strength Index to learn more about the cryptocurrency market.

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