The analysis of charts must above all allow you to find a point of entry on the market as interesting as possible. For a consistent analysis of this type of asset, we recommend that you first use Japanese candlestick charts. This display will allow you to directly display price changes over the period you have determined with the highest and lowest levels and the opening and closing prices. You can, on some charts, vary the shape of the candles displayed to maximize the relevance of your observations.
Regarding the technical indicators to be favored for this type of crypto-currency analysis, we will focus on moving averages. These can be used conventionally or as dynamic supports and resistors. In this way, moving averages help us determine the continuation or reversal of an ongoing trend. The crossings of several moving average curves are in particular very good indicators of impending trend reversal.
When you begin to analyze the price of a cryptocurrency on charts, the notion of volume must be of great importance. Indeed, the volume of exchange of a virtual currency is an indicator of choice to know if a trend will continue or turn around. It is often noted that the volume reaches its highest level generally before the price which allows to anticipate the reversal of a movement in progress. When a volume begins to fall while the price continues to rise, it is probably imminent that the price trend is reversed.
Another interesting technical indicator to use in the context of the technical analysis of cryptocurrencies is the stock RSI indicator, which should however only be used in addition to one of the other indicators mentioned above. This indicator will indeed reinforce an existing feeling or cast doubt on a forecast. When the curves of this indicator are above the high zone, this indicates a situation of over-buying and an over-valuation of the cryptocurrency rate. We therefore expect a rapid bearish reversal. In the opposite direction and if the RSI curves are below the median zone, this indicates an over-sale situation and therefore a high probability of a return to the upward trend.
Whatever the technical indicators you plan to use during your technical analysis of the course of a cryptocurrency, know that the more graphics you use will be complete and customizable and more reading will be simplified.
Crypto-currencies are indeed assets of a new kind, they enjoy a special attraction from investors, especially since the success of the first dematerialized currencies such as bitcoin. The popularity of a cryptocurrency with the public is thus very often correlated to a positive progression of its stock market price. We note that when the news deals a lot with one of these crypto-currencies, it tends to appreciate in the market and vice versa for crypto-currencies that are not or little cited by the media. This phenomenon, of course, also affects the outflows of new virtual currencies which enjoy more or less strong media coverage, which almost directly determines their starting price and their short-term evolution.
As is the case for stock market shares, which are sure to increase as the number of securities on the market increases, the price of crypto-currencies also depends very much on the volume of units in circulation on the market. Thus, the crypto-currencies most used and thus having a larger volume or which tends to increase rapidly will tend to interest more investors and therefore to see their price rise.
As you will have understood here, the price of a given cryptocurrency and therefore its value often evolves at the expense of others. There is a strong competition between the different dematerialized currencies of the market and it is found that when the price of one of these cryptocurrency rises sharply, that of its main competitors has, for its part, a tendency to fall. This is due to investors’ lack of interest in this area from one virtual currency to another.
Finally, one of the most important fundamental indicators with regard to cryptocurrencies remains the negative news, especially with regard to piracy cases or the security of private data. It goes without saying that the slightest loophole in the system of encoding and encrypting data and exchanges carried out by means of cryptocurrencies would have important and negative consequences on the price of the currency concerned but also on all virtual currencies based on block chain technology.
Regardless of the impact, positive or negative, that these fundamental indicators may have on the price of a cryptocurrency, these events should be considered as attractive entry points into the market when data from technical analysis are concordant. This will give you every opportunity to build an effective strategy.