Cryptocurrency technical analysis: A checklist for advanced traders


Despite cryptocurrency being publicly traded, it is a notoriously more volatile market than even some of the most seasoned investors are used to. Cryptocurrencies have the ability to undergo great change over a short period of time, which makes analyzing these trends effectively, more hands-on than most other market analyses. Another thing that makes cryptocurrency so exciting and nuanced is that there are many more currencies than just the popular bitcoin. So if you’ve already invested in multiple types of cryptocurrency, or you’re looking to invest, you’ll have to keep a close eye on more than just one market at a time.

As an advanced trader, chances are you’ll already have a good idea what crypto you’d like to be invested in, or perhaps, have already invested. With this in mind, there are five objective criteria that you should be paying close attention to in both short-term, and long-term, capacity. To demystify these “five musts-dos” we spoke to a senior crypto analysis blog editor at CryptoCoinTrade, for their in-depth perspective on crypto technical analysis.

Stay on Top of Technical Investigation

For the reasons stated above and more discussed throughout this post, it’s extremely important for any crypto trader to stay on top of technical investigation. This means carefully analyzing both short-term, and long-term trends daily. Keeping a close eye on moving average and trading volume can provide an excellent idea of market demand and provide an excellent platform for predictions. Without fundamentals, it is even more difficult to accurately predict market fluctuations in cryptocurrencies, which is something many investors enjoy.

Know Your Role

It’s important to know what indicators and tools you have a tendency to rely on early. If you employ too many different technical analysis tools, you may lose sight of trends more easily. While it’s absolutely a great idea to keep in exceptionally close contact with the crypto market, it’s also wise not to focus on too many predictive elements. Having a thorough understanding of indicator tools before you apply them to any given market will keep you on track with patterns and make trends more easily readable. Knowing which tools work best for you may take some trial and error as some tools work better than others, depending on how you work as a trader. Read often and know early. Then apply to markets.

Understand What Motivates the Crypto Purchaser

Unlike other stocks, most cryptocurrencies aren’t backed by fundamentals, making many market trends that much more difficult to predict. Not to mention that early information regarding sell-offs and rallies is generally leaked to insiders first, creating a massive asymmetrical information design that can lead to costly pump and dump and insider trading schemes, should you not be carefully in tune with the activities of the whales in the market. For this reason, many advanced traders turn to the Elliott Wave principle as one of their most prized guiding tools of advanced analysis. Fortune may favor the brave but mastering an Elliott Wave analysis takes years to perfect, and even then, it can be falsely predictive.

Know Your Bullish Candlestick Patterns

Candlesticks are one of the most basic and the most commonly used predictors in crypto technical analysis. Building a very familiar relationship with five major candlestick patterns can give you an advantage when predicting price direction and momentum. Candlestick pattern familiarization is a basic tool, but something that even advanced traders should pay attention to. The Bullish Engulfing Pattern, The Morning Star, The Hammer, The Piercing Line, and The Three Soldiers are all bullish candlestick patterns that any investor or anyone performing a technical analysis of any cryptocurrency should be acutely aware of.

Understanding Oscillators

While oscillators are generally considered to be a more advanced analysis tool specifically when used in conjunction with other analysis tools like clouds, they are also considered paramount in crypto technical analysis. Don’t forget to check that and pay close attention to what they are saying about market momentum. Because of their high volatility, as discussed earlier, cryptocurrency prices are generally traded in an overbought and oversold posture. This makes the Stochastics and Relative Strength Index oscillators excellent indicators of upcoming market trends.

Last Updated on February 3, 2021.


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