we will go over the following:
🚨 Supply & Demand
🚨 Take profit and Stop loss
🚨 Good indicators to use
🚨 Some videos to help
Before I begin, it is important to note that Technical Analysis (TA) alone cannot offer 100% price prediction.
Nothing can for certain.
But a combination of very good TA and just some form of fundamental analysis can lead you on the right path to gains.
Now let’s continue.
1) Supply and Demand
This is a simple yet very effective method of determining price action from the charts.
I would be sure to link videos as well for my visual learners.
Some simple concepts to begin with are Support and Resistance;
Support is the lower point at which the price is expected to reject.
Resistance is the upper point at which the price is expected to reject.
Over the years, traders strongly believe that the past has its way of repeating itself, this especially happens in crypto as well
The circled points in the previous diagram are areas where price has either rejected to the downside several times
Or bounced of to the upside
This gives off the hint of the same action happening on another day that price reaches that point.
A retest of the same level is also something to note to confirm price action in one direction.
There are various chart partterns that help identify the movement of price for a short or even extended period of time
These same patterens have repeated themselves in previous years, giving traders the confidence in it working well
Here are a few below:
2) Take Profit and Stop Loss
Never enter trades without a stop loss❗️
The ratio I like to use is 1:3, meaning profit must be 3x more than your stop loss
A little illustration of that
Also note that it is best not to risk more than 2% of your account per trade.
For instance for an account with $10,000 you can risk up to only $200 per trade.
For forex traders, this is somewhat similar to lot sizes in order not to blow your account.
3) Now we are moving on to some good indicators to use for TA
– Volume shows market strength like this:
Low volume = Weak trend
High volume = Strong trend
Price Increase + Vol increase: bullish
Price increase + Vol Decrease: weak uptrend
Price Decrease + Vol Increase: bearish
Price Decrease + Vol Decrease: weak downtrend
– The MACD indicator is another commonly used for TA.
It is a momentum indicator that follows the trend.
Traders use the MACD’s histogram to determine whether bullish or bearish momentum is strong—and potentially overbought/oversold.
The RSI is the next indicator.
Low RSI values, less than 30, indicate an asset is oversold or cheap. (Purchasing opportunity)
High RSI values above 70 indicate an asset overbought or overvalued. (Sell possibility)
50 denotes a neutral or balanced stance between bullish and bearish positions.
– Moving Average or MA
The 5, 10, and 20-period MAs are excellent for short-term trading, while the 50, 100, and 200-period MAs are better for longer-term trades.
When the price remains above the moving average, this indicates an uptrend (buy).
If price movement tends to stay below the moving average, this indicates a downtrend. (Sell)
– Bollinger bands
The higher band denotes overbought or overpriced area, while the lower band represents oversold or undervalued territory.
Usually used in conjunction with other analytic tools.
In my opinion, mastering the basic supply and demand will make you the most confident in trading crypto
Once you have mastered that, you can verify your trades with just 1 indicator.
Be sure not to bombard yourself with too many methods of trading; stick to 2 strategies most