Chart Reading 101

Everybody talks about how important technical analysis is but most people have no idea how to conduct it. I have been trading using strictly technical analysis for years now and I believe it is one of the best strategies to use when trading. First and foremost you have to understand two things: 


1. Technical analysis will usually be late. Many times indicators are going to tell you to buy after the large jump happens.If you stick too closely to indicators then it is going to cause you to buy at the top and then take a loss because of it.

2. Use technical analysis as an additional tool. Do not use it on its own because it can be manipulated by social data. Technical analysis is based on numbers. It is not taking into account any “big news” that a company may have. Many times there could be large gains/losses due to social data and your technical analysis may not be accurate because of it. Pay attention to everything and you can be successful.


Basic Technical Analysis

I want to talk about support and resistance lines because they are easy to understand. The support line is the link that is drawn at the low point of a time frame. If the coin price crosses this line, there is a strong belief that the coin will continue to go down.

On the other hand, there is the resistance line which is at the high points for that time frame. When the coin price crosses above this line, there is strong support saying that the price will continue to rise.

That is a little bit of basic technical analysis. I will be covering more of this in the future including specific indicators that I use when I trade.

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