How Important is Technical Analysis in Bitcoin Trading


The world and industry of Bitcoin is a decade-old one, but despite it being around for so long many people are still not nearly knowledgeable enough about it. And here we do not mean the general public, but those actively doing business with digital currencies as well. For cryptocurrencies to become more prominent and widespread and finally achieve what they were always said to be capable of, there should be more understanding towards them. This can only start if we know more about the important things that help us succeed in the industry.

One of those would definitely be the technical analysis of Bitcoin Trading, that is, getting a better sense of the market sentiment as well as the crucial trends. With such information at their side, average traders can make better judgments, predict the fluctuation of the market more accurately, and become more successful at their job in general.

To do this however you have to approach it the right way. Worry not, as the article before you will help you do just that. If you wanted to know just how important technical analysis really is for Bitcoin trading, all you have to do is make it until the end. Alternatively, to learn more about this and start making some daily crypto profits, make sure to check out

Source: Medium

Getting a Hang of Things

Technicians, or chartists as they are sometimes referred to, look at the whole picture by examining the history by using analytical tools. This gives them a chance to better understand how the current market looks and feels. The price movements are the predominant interest in the technical analysis game. Most of this can be learned by simply looking at the history of Bitcoin and its price history, taking into consideration the many volatile spikes, both positive and negative. Identifying the patterns, or at least trying to do this as it is very difficult, is the best chance you have to predict the next potentially game-changing event.

Source: CryptoPotato

The Basics

In order to better understand all this, the basic concepts should be mentioned. First of all, you should know that the market discounts everything, and all of the current, past, and future information is already taken into account regarding the ongoing price of something, in this case, Bitcoin. Therefore, the price of over $19,000 per coin that is relevant right now is already a reflection of all the past demand, the current circumstances, and the perceived future supply and demand. Everything is already reflected by the information, knowledge, and expectations of the market and those who participate in it. What technicians analyze is how all of this influences the market, what it says about it, and how it can be used for the most accurate prediction. All in all, therefore, technical analysis is of the utmost importance.

Next up, we have to talk about the price movements. They rarely happen without any reason whatsoever. Instead of such a random flow, they follow both the short-term and the long-term trends that have to deal with all sorts of factors. When a trend is there, it is harder to ignore it than to follow it, and technical analysis exists to explore how we can benefit from the trend in question. The reasons are not that important in the world of technical analysis, as the technicians focus predominantly on the price history instead of the specific things that created the circumstances in the first place. Looking at the supply and demand changes as a result of however many factors is key here, not what those factors were per se.

Lastly in this section, we must refer to the old saying that history tends to repeat itself. This is true in financing, economy, trading, and investing. The psychology of the general market is predictable and the traders and investors respond the same when similar circumstances as before arise. Therefore, learning what happened before and how the best ones in the game reacted can help you in the future when a similarly dire or promising event takes place.

Source: TradeATF

Things to Remember

It has been mentioned a few times already that by leveraging the data they get from all the analysis, traders can take advantage and make better business moves and smarter investment decisions. Still, though, there are a few things worth mentioning that you should be aware of.

First of all, despite technical analysis being so great, only taking into account the price and volume of something can cause you to miss out on a huge opportunity or to buy some Bitcoin amount when it is not so favorable to have it. Buying Bitcoin when it is undervalued or when the price is inflated is a recipe for disaster, and common sense should be used as well in many cases other than pure technical analysis.

In other words, this calls for the combination of technical analysis and fundamental analysis. A great example would be when a trader realizes that all the indicators and patterns point towards an obvious purchase of a supply of Bitcoin, but they are still unsure. Then, they can help their case by evaluating fundamental data that deals with factors themselves and what and how influenced the market.

For the trader to make the best possible use of all of this is to utilize both analyses from the start, especially if the track record requires it and when the market is more difficult to navigate than usual. First, through the use of fundamental analysis, they would see if Bitcoin is currently either overvalued and inflated or undervalued and not at all in demand. Then the more technical analysis takes place to help them calculate the best time and place to sell or buy the most valuable digital currency.

Source: Pensacola Voice

Conclusion and Takeaways

To answer the all-important titular question of our article here, technical analysis is very important for the overall success of the digital currency industry. However, relying only on it all the time will eventually lead to some missed chances and failed opportunities. Therefore, from time to time, you also have to consult the other, more fundamental kind of analysis and harness the power of both to your advantage and benefit.


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