Technical Analysis: Everything YOU NEED TO KNOW!! 👨‍🏫

if you're a hardcore cryptocurrency hodler you've probably seen many price pumps and dumps come and go at some point you've probably looked yourself in the mirror and asked why you didn't sell the top and buy the dip after all the crypto market ebbs and flows right that's what seasoned cryptocurrency traders believe and capitalizing on these short-term patterns is what has made many of them so successful for the average crypto connoisseur however hodling will provide the same profits or more than if they had actively traded this is because cryptocurrency trading is hard and the technical analysis required to do it effectively takes a lot of time a lot of practice and a lot of patience to master my name is guy and my mission today is to take you through some of the basics of technical analysis for cryptocurrency trading by the end of this video i guarantee that you will have all the tools you need to hammer out your own unique trading strategy for every cryptocurrency you are holding [Music] before we break out the bollinger bands i need to share one critical indicator with you i am not a financial advisor and nothing i say during this video should be considered financial or investment advice it's up to you to build up the knowledge you need to make your crypto dreams come true it's a long road to lambo land and this video is just another stepping stone on that path in case you missed it my name is guy and i am the lead detective here at the coin bureau i search far and wide for the latest and greatest cryptocurrencies d5 protocols exchanges and everything in between nothing crypto related is off limits nothing if you want unlimited cryptocurrency content kindly navigate to that subscribe button and give it a click don't forget to ping that notification bell so you don't fall behind on what's hot as always timestamps are in the description be sure to use them if you're short on time or are looking to scratch a particular itch now sit back relax get a drink if you need it and let's get technical to the untrained eye technical trading looks incredibly arbitrary just pull up trading view draw a few lines number go up and boom you're warren buffett jr of course whenever you or i try doing this we just get bogged surely there is more to technical analysis than drawing a bunch of lines and hoping for the best as it turns out technical analysis actually has some solid science behind it and has existed for hundreds of years the candlestick chart that comes to mind when you think of trading is said to have been invented by a japanese rice merchant named honma monehisa almost 300 years ago so if you're a weeb you have no excuses not to learn technical market analysis honma wrote what is believed to be the first book on market psychology which details many of the patterns and terminologies expert traders continue to use to this day he's believed to be the most successful trader who ever lived reportedly banging over 10 billion in today's dollars over the course of his trading career that's not so hard to believe considering that he was probably the only person on the planet at the time who had an in-depth understanding of the ebb and flow of commodity markets but it wasn't just honma's first mover status that made his trading so successful it was his understanding that human psychology is what fundamentally moves any given market emotions like fear and greed follow surprisingly consistent patterns and with the right analysis these patterns can not only be easily seen on a candlestick chart they can also be predicted it wasn't until the 1970s that trading charts we see today started being actively used in western markets prior to that technical market analysis was done using dow theory which was invented by charles dow the creator of the dow jones industrial average and co-founder of the wall street journal not surprisingly dow theory is based on the same psychological principles as honma's candlestick patterns it is important to keep in mind that although technical analysis has proven itself to be a powerful trading tool there are other factors you should keep in mind when it comes to crafting a trading strategy for cryptocurrency this includes things like tokenomics network activity use case the team behind the cryptocurrency any notable partnerships it has and even macro indicators like bitcoin's stock to flow model and bitcoin dominance evaluating these factors is called fundamental analysis because it focuses on more objective measures of an asset's potential value if you're a hodler these are probably the metrics you're using to decide on which cryptocurrency to invest in and when to sell it i actually made a video about some of these fundamental metrics and how you can use them to find promising altcoins that could moon you can check that one out by clicking here in contrast to fundamental analysis technical analysis focuses almost exclusively on price action pumps and dumps are ultimately caused by the irrational emotions of the people holding an asset fundamentals be damned some would argue that technical analysis is the more accurate way to trade cryptocurrencies given that the average cryptocurrency holder is exponentially more irrational than suit and tie wall street investors given all the insane price action around food themed defy tokens and wi-fi token clones i think there's a case to be made there however each cryptocurrency will require its own special blend of fundamental analysis and technical analysis in its price projections it will be up to you to figure out how much emphasis you should be putting on one versus the other most of this will be determined by how long you plan to hold that cryptocurrency for as a rule of thumb technical analysis is used for shorter term trading and fundamental analysis is used for longer term trading and hodling if you really want to be a crypto king or queen you'll need to learn how to do both you should also remember that although stablecoin trading pairs like eth-usdt are the easiest to keep track of an asset in terms of dollar value trading pairs with bitcoin such as eth bitcoin can often give you a better sense of how well a cryptocurrency is performing relative to others this is obviously pertaining to altcoins and i have a video about how to plan your own ultimate altcoin exit strategy which you can watch by clicking here without further ado let's take a look at a few of the key elements used in technical analysis almost everything in technical analysis involves the candlestick chart most of you are probably familiar with it by now but i bet a lot of you still can't explain exactly what it is or what it shows you when it comes to trading each candle you see on that graph in a standard cryptocurrency exchange gives you a snapshot of the trading activity within a given unit of time for example if you have the chart set for one hour each candle will represent one hour of trading activity for that asset pair not surprisingly a green candle mean prices went up during that period and a red candle means that prices went down almost all the candles you see will have something called a body and a wick the body is the thicker part of the candle and the wick are those lines you see poking from the top or the bottom for green candles the bottom of the body is the price that the trading started at during the time period and for red candles it's the top of the body when you see a candle as almost nobody it means that almost all of the trading during that time period took place within a very narrow price range this means that the price did not change during that time when you see a candle that's almost all body with no wicks that means price either moved to the upside or to the downside during that period the bigger these candles are the more fomo or fud we feel wicks on a candle denote the highest and lowest trading prices during that time frame these wicks are incredibly useful because they can tell us when traders are taking profits or buying the dip a long wick on the bottom of a candle suggests that traders are buying the dip meaning price could still be bullish a long wick at the top of a candle suggests that traders are itching to take profits which could be foreshadowing a shakeout however it's only when you factor in trading volume that you can really start making price predictions with candlestick charts factoring in trading volume is critical for good technical analysis each volume bar you see at the bottom of a trading window shows you the amount of an asset that was traded during the time frame you've set as a general rule of thumb you want to be trading on a market with lots of volume low volume tends to lead to price volatility meaning that price could suddenly spike up or down pro tip volume is the first thing you should look at when you're considering buying some hot altcoin on a shady cryptocurrency exchange some lesser-known exchanges will even set longer default trading time periods to hide low liquidity and questionable price action make sure that you still see a high amount of trading volume with shorter time frames before throwing your money into the void volume is used by many traders to confirm a price trend for example imagine you see the price of your favorite altcoin steadily dropping most of the candlesticks in the last few hours or days have been read and it's not getting any better without looking at the volume you might think this means you're headed for some hurt but when you check the volume and you see that as price continues to drop trading volume is also dropping this means that the downtrend you see is not very strong despite what the price action might have you believe the bulls are standing by and once the volume drops low enough volatility kicks back in and the bulls are off to the races the same is true if the price is rising and trading volume is decreasing this means that there's only a matter of time before volatility strikes and that could bring a strong reversal in price action now that you have a solid grasp of candlesticks and trading volume let's take a closer look at some of the common patterns found in trading if you've ever seen an expert trader in action you know they love to draw lines as much as the fed loves to print money when traders draw lines they're normally looking for three things support resistance and a recognizable price pattern support refers to the lower limit of where the price of an asset could go and resistance refers to the upper limit of where the price of an asset could go there are many ways to assess where the support and resistant prices could be the simplest method is to look at the lowest and highest prices hit during a given time period if you draw a resistance line across the tops and a support line across the bottoms it will give you a sense of how much volatility the market could experience going forward which direction the price is likely moving and even when to sell and when to buy more often than not drawing these support and resistance lines reveals a recognizable price pattern there are dozens of price patterns and most of these have stood the test of time continuing to repeat themselves in every market ever since honma munihisa first defined them almost 300 years ago of all these patterns triangle patterns are considered to be the most reliable by professional traders triangle is created every time support and resistant lines converge the two most common triangle patterns are ascending triangles and descending triangles in an ascending triangle the resistance line is more or less flat and the support line is angled upwards in a descending triangle the resistance line is angled downwards and the support line is flat why the hell are these triangles so important well when the current price reaches the edge of an ascending triangle price tends to spike upwards and when it reaches the edge of a descending triangle the price tends to drop oddly enough you can often use the left side of the triangle to determine just how much the price will change to the upside or to the downside if this feels a bit too arbitrary you can use a number of technical indicators to help you double check if you're on the right track with your support and resistance lines there are literally hundreds of different indicators that people use in technical analysis trading some of these are free to use and others you will have to pay for unless you're planning on being the next wolf of wall street free technical indicators will be more than enough to build a robust trading strategy there are four technical indicators that you should know if you want to effectively trade cryptocurrency moving averages the macd the rsi and bollinger bands moving average indicators draw the average price of an asset over a given period of time exponential moving averages or emas are commonly used in technical analysis trading without getting into the details emas put more weight on more recent prices when projecting a trend and react faster to price changes many traders believe ema's to be the most useful moving average indicators for this reason emas especially the 200-day ema are considered to be very important price zones for many traders if the current price of a cryptocurrency is below its 200-day ema then it might see some resistance when it hits the 200-day ema line in contrast if the price of a cryptocurrency is above its 200-day ema the 200-day ema line is often considered to be a strong zone of price support the reasoning here is that the market has basically agreed that the fair price for that cryptocurrency is somewhere within that range as evidenced by the aggregated price action when a short-term moving average such as the 20-day ema crosses the 200-day moving average from above this is called a death cross and signals to traders that we're headed for a downturn in that market bitcoin experienced a death cross just over a week before the flash crash in march where it dropped by 60 in price when a shorter term moving average such as the 20-day ema crosses the 200-day moving average from below this is called a golden cross and signals that there are many green days ahead for that market bitcoin experienced the golden cross in may its price jumped from 8 000 to 10 000 shortly afterwards and has been in an uptrend ever since there is another powerful technical indicator based on moving averages called the macd macd stands for moving average convergence divergence it's used to determine new trends in price and measure price volatility for the purposes of this video all i'll say about the macd is that when the two lines you see are far apart it means that price volatility is low the closer those lines are together the higher the volatility if those two lines cross this indicates that the price is going to change direction in the coming hours or days and the direction of the bars you see will tell you which way the price is likely to go now for my personal favorite the rsi short for relative strength index the rsi is a favorite among cryptocurrency traders this is because it tells you if a cryptocurrency is overvalued or undervalued the rsi indicator is drawn within a number range of naught to 100 you can see this on the right hand side of the rsi's indicator window if the current position of the indicator is below 30 this means that the cryptocurrency you're looking at is probably undervalued in other words it's time to buy however if the indicator is positioned over 70 the crypto you're looking at is entering bubble territory it's time to sell the trend of the rsi line will give you a sense of whether the cryptocurrency you're looking at is becoming overvalued or undervalued as time goes on as long as you're within the 30 to 70 range the price is right finally we have the bollinger band indicator like the macd the bollinger band indicator is used to measure market volatility in contrast to the macd the wider the lines are on the bollinger band indicator the more volatility there is traders who use the bollinger band will generally buy when there is low volatility and sell when there is high volatility assuming price has gone to the upside during that volatile period if you slap the bollinger band indicator on your favorite crypto and see that its price is outside of the indicators range its high time to buy or sell depending on whether the price is pushing beneath or piercing through the top of the indicator's range using the various emas the macd the rsi and the bollinger band in tandem should give you all the information you need to execute effective short-term trades on your favorite cryptos just remember that what you see can and probably will change the second you adjust the time frame so are you ready to go out and sell those tops and buy those dips as i said it's going to take lots of time lots of practice and lots of patience to build a solid trading strategy i think i covered most of what you need to at least start dabbling in technical analysis candlestick charts show you much more than basic price action they can show things like whether people are buying the dip or taking profits drawing trend lines on candlestick charts reveals patterns that have repeated themselves in the markets for hundreds of years these will help give you a sense of where the price might be heading taking note of the trading volume will confirm whether that price action is genuine or not moving averages the macd the rsi and the bollinger band will help add some perspective to your initial calculations by giving a more accurate picture of price volatility identify any possible bubbles or buying opportunities and warn you of any incoming crashes or moonshots be sure to double check the time frames you're working with and remember that you'll probably have to use slightly different trading strategies for different cryptocurrencies it's also important to remember that technical indicators are not the be-all and end-all of cryptocurrency trading and keeping the fundamentals in mind will go a long way to helping make sure you see more green than red over the long term there's a lot more to cryptocurrency trading that i didn't cover in this video sentiment analysis whale movements fibonacci retracements there is still so much left to cover i might just have to make a follow-up i hope this video helped you understand the basics of technical trading if it did give that like button some love and if you're feeling a part two click that subscribe button and ping that notification bell so you get a heads up when it's time to get technical again oh and if you folks were thinking of trading and putting all this ta into practice you have to check out my trading competition there's over 4000 usdt up for grabs as well as some other goodies you can find a link to that bad boy down below finally if you're craving some more of this content then you should definitely join my weekly newsletter in it i share some spicy tips tricks and cryptocurrency treats so be sure to sign up by clicking that first link in the video description until next time guy out you

Channel: Coin Bureau

Views: 653,113

Rating: 4.9753246 out of 5

Keywords: Technical Analysis, Bitcoin, BTC, Crypto, Trading, Cryptocurrency, TA, MACD, RSI, FX, Forex

Id: lW3eWIj3Q04

Length: 19min 56sec (1196 seconds)

Published: Sat Nov 14 2020