Cryptocurrency prices are affected by a number of factors. Sometimes, it is not possible to determine what these factors are and how they affect the price. But, wouldn’t it be beneficial if traders could find a way to predict the movements taking place in the marketplace in order to execute profitable trades.
In this post, we will reveal how traders can predict crypto price trends and position themselves for success in the industry.
What to do when the market conditions are hard to understand?
Using the right type of analytical tool helps understands the situations in the markets. You must know that you can get access to graphs which can show you how a particular cryptocurrency has performed over time.
If you are a complete beginner, such graphs will not make sense to you initially. You will find it hard to understand what they are supposed to mean and how you can interpret them. But, if you take your time to study the graphs, you will find that they reveal to you some patterns and trends about the cryptocurrencies performance. You will be able to see which events have affected their price and what could possibly happen next.
As you become more experienced with reading and interpreting graphs, you will be able to figure out the direction in which the price of the cryptocurrency may move in the near future.
It is important for traders to have access to analytical tools. Market analysis is very important and trader must be grateful that today technology has made advanced trading tools and systems more accessible to them.
There are two types of analysis that you must focus on to be able to make predictions about the price of cryptocurrencies. These include technical analysis which is based on historical activities and fundamental analysis which involves focusing on the factors that are responsible for causing shifts in their prices.
But, how to read charts? They are confusing!
It is quite easy to read charts. Usually, you will see candlestick charts when you are looking for price analyses.
Candlestick is a method which allows traders to see how the cryptocurrency prices have fluctuated within a specified period of time. It provides comparisons and full details about the crypto’s price movements.
The shape of the candlestick reveals a lot about the price movement. It will be green when t he prices have increased by the end of the time and it will be red when the prices have dipped. The candlestick method of predicting price trends is tested and it certainly works for trades.
Taking actions based on chart readings
If charts are interpreted correctly, they can give profitable opportunities to traders. For example, the hammer candlestick which has a long line towards the bottom can indicate that the prices fell steeply before making a recovery. The pattern reveals that during the trading hours, the asset was sold extensively and because of the pressure put on it by traders, it gained strength, causing its price to rise again.
When it comes to reading charts, it is important to look at the short term as well as the long term prospects. It is also crucial that you take precaution in order to deal with the volatility experienced in the marketplace.
A look at the techniques used to conduct technical analysis
The role of analysts is to find out which trends tell the most about movements taking place in the market. The two most common methods used by analysts involve trend lines and moving average. In the former method, extreme outliers and anomalies are disregarded when detecting the upwards trends of a cryptocurrency. In the latter, the prices of the digital asset is tracked over a predetermined period of time.
Is technical analysis enough for predicting trends?
We can agree that technical analysis is the most common method used to predict price trends, but with technical analysis alone, you will never become aware of the fundamental factors which can affect the prices and the markets.
Therefore, if you are looking for success, you should not depend on technical analysis alone. When there are more tools available, you should make use of them as well.
What other tools can help make analysis simpler?
You have a range of options. Firstly, there are website which have been established to help beginners learn all about trading. There are guides and tutorials available which can educate you on the kind of tools available and how they can be used to simplify trading. Then there are news sites which give you all the details about the events and happenings affecting the prices of assets. Staying up to date with the latest crypto news can be really beneficial for you because they can help you get the bigger picture.
Additionally, there are trading tools and software systems available which help simplify trading to a great extent. These tools conduct market analysis on their own and deliver signals which can be used to make trading decisions. The signals are delivered only after predictions about the price trends have been made by the trading system. The system adheres to a specific set of rules which helps eliminate emotions and human errors.
Overall, they are great options for both newcomers and experienced traders. They don’t only make trading simpler and easier, but give traders access to a wide range of profitable trading opportunities.