How to Use Technical Analysis in Crypto Trading

Technical analysis is a means through which crypto traders analyze the value of cryptocurrencies by examining the graphs and the historical prices data of the given currency. It assists the traders to make wise decisions rather than guess. In a simplistic manner, technical analysis assists you in understanding when to purchase or sell a coin since it gives a historical pattern and tendencies. This tool is being used by many traders in the world including the traders in Nigeria as a way of trading better and cutting down their losses.

Technical analysis does not look into the project behind a coin as compared to fundamental analysis that deals with the project itself. That is why it can be useful in the dynamic crypto market where prices can instantly increase or decrease. Technical analysis helps traders to realize how the market is behaving as well as enabling them to respond fast.

Candlestick chart is one of the primary methods of the technical analysis. The chart in this case illustrates the price wiggle of a coin over a given time (such as an hour, a day or a week). Every “candle” reflects the price opening, closing, highest price and price lowest. The candles trick traders with their color and shape which will reveal to them whether the price will be on an increase or in decline.

Other terminologies that are handy in technical analysis are resistance and support levels. Support is a price whereby the coin does not fall at a high rate but will instead begin to go up. That position at which the coin is likely to stop rising and start falling is what is called resistance. As soon as the price breaks resistance level higher and support level lower, it can begin to trend down and up respectively.

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The moving averages cannot be left behind. They add the average price of a coin on a fixed number of days such as 10, 50 or 200 days. When the coin is above its moving average, it is possible that it can be in the upward trend. When it is low it can be on the downtrend. Moving averages will help you to assess the trend of the market.

There is another indicator known as the Relative Strength Index (RSI). This will monitor the oversold and the overbought coin or coin conditions When RSI exceeds 70, it may point to the fact that the coin was overbought, and it may start to plummet in the short-term. At times, once RSI falls below 30, it could become oversold and could increase. This can make the traders time their entries and exit more easily.

Another thing to observe is volume. It shows the extent of the coin trade. When the price is increasing, and the volume is large, then the movement is good. But at some point when the volume is low movement can be flimsy or false. Volume is used to verify whether a trend is real or not.

In making use of technical analysis, it is always advisable to go back to longer periods such as daily or weekly charts. This is to make you know the general trend. At this point, you can change to less amount of time such as 1-hour chart or 15-minute charts as to determine the most appropriate time available to sell or buy a trade.

Two or more tools at a time are also good to use. This can be illustrated by looking at the RSI where it is showing that a coin is oversold and the price is at a firm support point which could create a possible buying opportunity. However, when the RSI indicates overbought and price is close to the resistance, it will be a good opportunity to sell.

Duncan is of immense importance as far as risk management is concerned It is not all the time that took into account the technical analysis There are times when the market is unpredictable. This is the reason why stop-loss orders are applied by traders. A stop-loss is the instruction that will automatically make a sale of your coin, in case the price is lowered too significantly. This makes big losses reduce the big losses made.

The technical analysis is something Nigerian traders should learn. The market of crypto trading in Nigeria is growing, which attracts many young people into the market. However, without the appropriate knowledge, one is likely to lose money. Technical analysis may help traders minimize their losses and increase the profit. You can also have the free tools that can help train and train your skills, such as trading view or binance charts.

Conclusively, technical analysis is an effective way to understand the situation in the crypto market and make a more informed decision in regard to making a trade. It has charts, patterns, and indicators that depict when to buy or sell. Nigerians and other people worldwide can start to learn the secrets of technical analysis and explore new and safer ways to make a profit by trading different types of financial instruments. It needs time and practice as well, but it will be worth it.