What are the Important Technical Analysis Indicators in Crypto Assets

Hi everyone, crypto greetings to all my friends here, I @breuh-mirah will write a little description about technical analysis indicators that are very important in crypto

As much as we know about crypto assets, there are several ways to assess and predict currencies, one way to do this is by an approach known as technical analysis.

With this method we will know a better understanding of the market sentiment and will master the significant trends of the market and this will be used as a stronger prediction and invest wisely

Technical analysis takes into account the historical movement of crypto assets with price charts and trading volumes, as well as anything that was done to the token. On the other hand, fundamental analysis is more focused on determining whether the coin's valuation or value is higher, appropriate, or less.

Basic Idea of Crypto Asset Technical Analysis

Well, to get a better picture of technical analysis, it is very important to understand the fundamental ideas of Dow Theory that technical analysis is based on:

The market considers everything regarding pricing. All existing, past and future details are integrated into the calculation of the current asset price.
With regards to Bitcoin or any other crypto asset, this will consist of many variables. For example, such as current, past and future demand, and any regulations that affect the crypto market. Existing prices are a response to all the latest details, which include expectations and knowledge of every coin traded in the market. Technical analysts interpret prices in relation to market sentiment to make wise and calculated predictions for the future.
Price movements are not random. On the other hand, prices often follow trends, which can be long or short term. Once a trend is formed by the token, it may continue or reverse. Well, technical analysts try to help investors in using and profiting from the trend.
The 'what' is more important than the 'why'. Technical analysts focus more on the price of the coin than on any variables that generate price movements. While various aspects can influence the price of a coin to move in a certain direction, technical analysts tend to review supply and demand.
History tends to repeat itself. It is possible to predict the psychology of the market. Traders sometimes react the same way when experiencing a similar sentiment or trend.

Crypto Asset Technical Analysis Indicators: Trend Lines

Trendlines, or the typical direction of price a token is going, can be very useful for a cryptocurrency trader or investor. However, using this method is easier said than done. Crypto assets can be very volatile. Observing a chart of the price movement of Bitcoin or another crypto asset may reveal a selection of highs and lows forming a linear pattern.

With that in mind, technical analysts can ignore volatility and spot an uptrend when looking at a series of highs. Vice versa, you can identify a downtrend when you see a series of low price positions.

Moreover, there is a sideways trend, and in this case, the token is not moving significantly in either direction. You should be aware that trends come in a variety of period forms, including mid, long and short term trend lines.

Resistance and Support Levels

In addition to trend lines, there are also horizontal lines that show support and resistance levels. By identifying these levels, you can draw conclusions about the supply and demand for tokens.

At the support level, there appears to be a large number of investors or traders willing to buy the coin (big demand). The investor believes that the currency is undervalued at current levels, and will therefore seek to buy it.

Once the token approaches that level, a buy situation then occurs. Heavy demand usually stops the decline and sometimes even turns the momentum into an uptrend.

Meanwhile, resistance levels are just the opposite, which is an area where many traders are waiting patiently to sell tokens. This forms a large supply zone. Whenever a coin gets close to that “upper limit”, a crowd of tokens will be sold and a large supply back.

Moving Average or Moving Average

This is another technical analysis tool for cryptocurrencies and other instruments in general to simplify trend prediction. The moving average is based on the average price of the token over a certain period of time. For example, the average price movement on a given day will be calculated according to the token price for every 20 trading days prior to that day. The data is then connected to form a line.

It is also important to recognize the exponential moving average (EMA). Where is the average price movement that gives a deeper weight to the price value of the last few days, compared to the previous days. An example is the calculation coefficient of the last five trading days with a 15-day EMA scheme will be double that of the previous ten days.

In the following chart, you can see a practical example: If the 10-day moving average is above the 30-day moving average, it may tell you that a positive trend is coming.

Trading Volume

Trading volume plays an important role in identifying trends in technical analysis. A significant trend is accompanied by high trading volume, while a weak trend is accompanied by low trading volume.

When the coin goes down, it's recommended that you check the volume that accompanies the drop. The healthy growth trend over the long term is accompanied by high volume increases and low volume declines.

It's also important for you to notice that the volume increases over time. If volume decreases during an uptrend, the uptrend is likely to end, and vice versa during a downtrend.

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Thus a brief description of the technical analysis method may be useful

regards
@breuh-mirah