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Before we head into anything, be it a business, a job or the Crypto market. Analyzing how things work in that specific workplace is the most important thing to do beforehand. If you skip this step, there are high chances that you'll end up in a big mess.

Not long time ago, when I had little knowledge and information about the Crypto Market, I'd invest only taking into consideration the news. That was my fault while pouring in my money in the Crypto market. Due to this I faced huge losses as well. One thing to realize is that, news, anchor persons, and social media are there to create hype about unnecessary things. It's not always like that, but majority of the time, you shouldn't play with your money based on what you've heard or seen on the news.

It was only then, when I started analysing the Crypto market before investing and so far it's good. You won't always end up with good profits but the chances of you foolishly loosing money will decrease. There are two major types of Analysis in the Crypto market:

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• Fundamental Analysis:

It's the sort of analysis when you study the asset and it's background in detail. It's market capitalization, projects associated with it, it's team and their reliability. Some of the important elements of of Fundamental Analysis are:

• Market Capitalization

• 24H Volume

• It's community

• Circulating Supply

• Historical Data

• News

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Technical Analysis:

The sort of analysis done by traders on charts with the help of Technical Indicators, trends, gap levels and other things. In this engagement challenge, I'll cover all the points associated with Technical analysis. Let's begin:

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How would you define Technical Analysis in the Crypto ecosystem? Mention its Importance.

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Technical Analysis is done on the charts of each specific asset that the trader wants to invest his/her money into. Technical Analysis helps us in trying to get good profits while trading. But how do we technically Analyse the market?

There a few ways of being an excellent technical Analyst. For example taking notes of the Price Volume and its Volume. It depends on trader to trader to what timeframe is he most comfortable on. There are a lot of trading styles for example the Scalp Trading or the Swing Trading. With these differences in the trading styles, the timeframe can be adjusted by the traders according to their needs.

What's your goal when you enter a market? To make profits, isn't it? And for that, you'll need to buy low and sell high. But it's easier said than done. But what if I tell you it is very much possible if you're analysing the market correctly? This is exactly where Technical analysis comes in. A very integral part of technical Analysis is the chart. There's a lot that you can analyse on a chart:

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This is a graphical representation of a crypto asset chart. On this chart, you can do technical analysis through changing the timeframe, by using tools, determining support and resistance levels, and adding indicators.

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The next important part of technical Analysis is the Technical Indicators without these it's practically impossible to have good trading decisions without Technical Indicators. Some of the Indicators that I have learned in the Crypto Academy are:

• Moving Average Convergence Divergence (MACD)

• Relative Strength Index (RSI)

• Moving Average Lines (MA Lines)

• Volume Indicator

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I'll talk in detail about Technical Indicators in the upcoming questions.

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Importance of Technical Analysis

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• A trader can easily determine the trends and trade accordingly.

• Trader can determine the Support and Resistance Levels.

• Technical Analysis helps greatly in scalp trading.

• You can master a lot of important Indicators.

• using different Technical Indicators together helps you in trading a lot more efficiently.

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Do you have practical knowledge of how to conduct technical analysis? Highlight some of the components of Technical analysis.

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All thanks to the professors in the CryptoAcademy who have helped me a lot in having a better understating of the technical Analysis in the Crypto market, and especially professor @kouba01 who has always emphasized on TA. The few important components of Technical Analysis are:

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Charts

As a trader who has practical knowledge I think the most important part while analysing the market is to know how to use the chart. When you open a chart, you can analyse the market through determining the support and resistance levels. Through Strong and weak gaps. All of these things can be determined on a chart.

There are alot of chart patterns that can come in handy while trading. Some of the most prominent are:

BARS

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CANDLES

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LINES

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JAPANESE CANDLESTICKS

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Technical Indicators

The other most important component of Technical Analysis is the Technical Indicators. These are tools which help traders in determining the price movements, the demand and suppy of price and the prediction of the trend movement in the market. One such example of a technical Indicator is shown below:

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A graphical representation of a chart with RSI}

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What do you understand by technical indicators? Do you consider them effective for trading cryptocurrency? Which one is your favorite and how does it work? (Screenshots required where necessary)

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Technical Indicators

Technical Indicators are tools used in the market to aid traders in their trading. These tools determine the price movement and predict the price of the assets through multiple ways such as opening and closing prices of the assets.

The most important reason why Technical Indicators are used by traders is to predict the price action and movement and trade accordingly in order to get some profits. There are a few pros and cons of Technical Indicators such as, where on one hand, they give you important information regarding the market, there are a few indicators which lag behind and give off false results, thus leaving the trader with losses.

There are a lot of indicators based on their work. Some indicators are there for measuring the strength of a pre-existing trend while some measure the volume of the asset in the market. Some measure the volatility of the market while some predict the price movement.

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Do you consider them effective for trading cryptocurrency?

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Definitely. If it were not for the technical indicators, I'd have been a very bad trader. Technical Indicators are essential while trading but you also have to keep in mind that you should never make your trading decisions based solely on the analysis of a single Technical Indicator. A good trader always uses more than 1 indicator and work with them help of them. Trading, using only one indicator will leave you in losses as usually some indicators give off false or late signals.

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My Favorite Technical Indicator

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Difficult Question. Honestly, there's no favourite. I use a lot of indicators and I use them simultaneously. In this question, I'll show you a one of my favorites and how do I use them to my benefits.

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Moving Average Lines

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I use two MA lines while trading. These two MA lines include one shorter Period and one longer period line. Through these lines I get two indications:

• Death Cross

• Golden Cross

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Death Cross:

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The death cross helps me in identifying a downward shift in the market, thus an early signal for the initiation of a bear market. The indication could be of a long term or a short term as well.

For a death cross, there must be two MA lines activated. I usually use a 50 days and a 200 days Lines to get a good result.

When the 200 days MA line, or the longer period line crosses over the 50 days MA line in an upward direction, it is considered as the Death Cross which basically means there's an initiation of the Bear Market.

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In this screenshot above you can see the Death Cross, ie, the bearish divergence when the 200 MA line crossed 50 MA line in the upward direction.

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Golden Cross

The golden cross helps me in identifying an upward shift in the market, thus an early signal for the initiation of a bull market. The indication could be of a long term or a short term as well.

For a golden cross, there must be two MA lines activated. I usually use a 50 days and a 200 days Lines to get a good result.

When the 50 days MA line, or the shorter period line crosses over the 200 days MA line in an upward direction, it is considered as the Golden Cross which basically means there's an initiation of the Bull Market.

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In this screenshot above you can see the Golden Cross, ie, the bullish divergence when the 50 MA line crossed 200 MA line in the upward direction.

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Highlight the advantages and disadvantages of technical analysis. What's your advice to anyone about it?

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Everything comes with pros and cons and its the similar with technical indicators and technical Analysis. Let's point out some of the advantages and disadvantages associated with Technical Analysis:

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Advantages

• Technical Analysis helps in having good trading decisions through precise calculations.

• Helps in determining the support and resistance levels in the market

• Alot of options in chosing indicators. You can use the ones you're comfortable with.

• can be carried out on any type of market, such as the crypto, stock, forex, etc.

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Disadvantages

• there's a lagging factor in some of the technical indicators, which effects the signals, thus not favoring the traders.

• some technical indicators are specified for a specific reading. They don't offer all in one option

• using a couple of indicators is good, untill they start contradicting amongst each other's signals.

• relying solely on technical Analysis, can result in losses. So it is important to do fundamental analysis as well.

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What's your advice to anyone about it?

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The best advice that I could give a newbie in trading is to not rush your decisions based on the reading of a Single technical Indicator or even multiple indicators. It is very important to do fundamental analysis as well. One more thing is to remember not trading, depending on a single indicator. Always use more than one indicators to establish a decision. Use these indicators with different parameters and with different timeframes to have a solid reading.

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CONCLUSION

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A fine topic in the first week of season 4. For anyone, starting to trade, technical Analysis is one of the most important thing to keep in mind and to work on. Technical Analysis includes of charts, indicators and how to use them to your favour.

This was a good topic to write on and I'm sure, you must have enjoyed reading. I look forward to the comments of users and their opinions.
Regards,
@huzaifanaveed1