7 Rules to Consider in Technical Analysis


Technical analysis aims to predict future market movement by observing indicators, volume data and price movements to identify actions. To predict possible future trends; It is necessary to examine data such as price levels, transaction volume on the chart. Technical analysis is widely used when trading in cryptocurrency markets. If technical analysis is not used correctly, it can lead to losses. We have compiled our list of 7 rules that should be considered in technical analysis in order to interpret the crypto money markets correctly and to determine the correct transaction price.

1. Drawing Price Patterns

The first of our 7 rules to be considered in technical analysis will be to pay attention to the drawing of price models. The interpretation of price action in technical analysis is specific to the analyzer. It is common for two investors to interpret the same price action differently and reach different results. While one trader may observe a bearish downside, the other may think it would be a possible upside signal.

While drawing the price models that you will use while determining investment strategy on the chart, the following should be considered:

Simply setting price levels can cause you to miss opportunities. Create support and resistance zones.

Identify and analyze the ups and downs.

Be careful not to use unimportant price levels in your analysis to determine the direction of the price. Pay attention to signals occurring in strong support and resistance zones.

Identify the cues given by the candlesticks. Long candle wicks express volatility and uncertainty. The up or down direction of the wicks show the effect of rising and falling, respectively.

2. Make It Clear On Which Pattern You Are Trading

There are a number of patterns in technical analysis that are indicative of market behavior. It is important to know which pattern you are analyzing on. Patterns have multiple properties, so it is necessary to use the pattern correctly on the chart and to know its features before you can be sure whether they are successful or not.

To learn more about the formations Most Frequently Used Candlestick Patterns in Technical Analysis and Classic Chart Patterns You can read our articles titled.

3.Know What Indicators and Indicators You Are Using

Indicators and indicators are statistical tools within the scope of technical analysis that provide buy or sell signals to investors. They only provide successful returns when used in conjunction with other technical analysis tools.

There are a number of indicators that help traders make trading decisions, such as the Relative Strength Index (RSI), Moving Average Convergence (MACD), Bollinger Bands (BOLL). It is necessary to know how to use these indicators and to use more than one indicator together during analysis.

Coinpara has more than 90 indicators and indicators. To learn more about commonly used indicators and indicators, Main Indicators Used in Technical Analysis and What is an Indicator? Why Use It? You can read our articles titled.

4. Avoid Backward Errors

Basic data, graphs, and indicators can paint a different picture of the current scenario, with results that can confuse. In this case, investors may tend to evaluate the possible price direction based on past results. Past results may not always be the same as in the future price scenario. In this case, expectation that past market movements will occur again can cause great losses.

The fourth important rule of doing technical analysis is to stick to the analysis of the conditions of the period in which you invest and do not bias with historical data.

5. Plan Your Trading Transactions

It is necessary to wait for buy signals and determine the correct purchase price and date before entering the market where you will be trading. Plan your buying and selling transactions in advance in accordance with your analysis period on the chart of the crypto money you think is suitable for you to trade.

6. Adapt to Flawed Market Actions

In crypto markets, the price is determined according to supply and demand and is dynamic. Erroneous price actions that do not conform to your analysis and rules are commonplace. If these actions occur, it is necessary to re-evaluate the analysis. Insisting on analysis, despite changing conditions, can result in huge losses. You have to get used to the idea of ​​imperfection, consider volatility and natural movements.

7.It Is Optional To Learn Technical Analysis

The last of our 7 rules to be considered in technical analysis is that learning technical analysis will depend on the wish of the person. Today, there are many technical analysis patterns and indicators, but it is not possible to master all patterns and indicators. You can start technical analysis by including the most commonly used indicators and indicators. Using too many indicators will create confusion and make you make the wrong decision. You should make technical analysis by using a few indicators and formations that you are comfortable with, and have detailed information about these indicators.

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