The Russian Roundup Presents: TECHNICAL ANALYSIS 101 FOR DUMMIES — #7
Once again, we are back with educational content to map out a blueprint that you can further develop to enhance your crypto knowledge. There is a lack of touch basis content and a lot of people seem to jump the gun when creating beginner targeted content.
So instead of trying to teach complex technical analysis before you get a platform to launch off, this article will be the ground level to build off to get an inkling of what technical analysis is.
What Is Technical Analysis? 📊
When people are first trying to get into investing, the first thing they envision is Instagram traders who post charts whilst they’re at the most exotic beaches but what is technical analysis?
The chart is almost the trail which price leaves behind while a certain asset is fluctuating in price whether that is stocks, commodities or crypto, anything with a price that fluctuates will leave a trail in a line chart or candlestick chart.
Technical Analysis is the act of analysing the trail which price leaves behind to be able to get a range of confluences to gain conviction that price will move in a specific direction.
Many people mistake technical analysis as a certainty however it’s very important to remember that the aim is to find confluences which help you identify which direction the momentum is going. There is no way to guarantee your analysis as they are always a hypothesis which can only be proven by that volatility.
Why Is Crypto Technical Analysis Different To TradFi Markets?🧐
There is a range of technical analysis strategies which are extremely transferrable but it’s important to remember traditional markets move very different from the crypto space.
If you have never looked at a crypto chart, and you have looked at a traditional chart like forex, you might completely be bemused by how often and the volatile price is for even trillion-dollar market caps like $BTC.
We can see thousand dollar movement in literal minutes in crypto which is something that isn’t familiar with traditional markets because once again the volatility in crypto leads to that price trail having a graver magnitude and having more movement.
When you do start getting to the teeth of it and start learning some technical analysis strategies, you may notice that people set shorter timeframes on their indicators or may look at different timeframes compared to tradfi markets.
If you do want to learn some strategies, the members library has a series called “Technical Walkthrough” where I teach some of my favourite strategies.
Just DM @RUSSIANDEFI On Twitter Or Telegram For The Membership Form!
What Are Indicators? 📉
The worst thing you can do while learning crypto is to think that indicators are 100% accurate and can never be wrong.
It’s a myth.
Indicators are essentially a set of mathematical tools which can be put on a chart to make that “trail printed by the fluctuation in price” a lot clearer. Technical analysis is once again about making a hypothesis which you can back by confluence and the use of indicators can help that process of identification and make it so that you can see things to create your bias.
There are essentially 3 different movements price can make realistically: Up, Down & Sidewards.
The use of indicators is to aid your process of looking for those 3 movements.
Some of the most used indicators you can further do some research on: Moving Averages, Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), Ichimoku Cloud and Volume.
What Are Candlesticks?🕯
As I’ve previously reiterated, the trial that price leaves on the chart can be in the form of lines or candlesticks but, if you want my opinion…stick to candlesticks.
The candlestick formation allows you to get the most data possible on the chart which will help you on identifying your bias.
Candlesticks can come in all different sizes and shapes which can identify many different things and can be quite helpful. When you open a chart you are going to see a chart printed with a range of different candlesticks that show the trial of price and essentially the whole basis of technical analysis is analysing the candlesticks.
It gets a lot more complex as you can have many different candlestick patterns like: Doji, Bearish Engulfing, Bullish Engulfing and Hammer.
Learning to analyse candlesticks is key. Pure price action allows you to analyse properly as indicators can often be considered myths.
Where Can I Analyse Charts?👀
In my opinion, there is only one platform you should be using to analyse.
On tradingview, you are likely to find a lot of mainstream coins as well as coins listed on all major exchanges like Binance and Kucoin so that you can get a better chance of identifying the right places to place your capital while investing.
TradingView 👉 https://www.tradingview.com/
You can use another platform for tokens listed on DEX’s as well in case they aren’t on the major retail exchanges.
DexTools 👉 https://www.dextools.io/app/
Myths About Technical Analysis 🎲
As this is just a beginner introduction to technical analysis I think it would be important to cover some myths so that you don’t get misled like I did when learning TA.
As I was learning, TA I thought that when my indicators identify my bias there is no room for it to go wrong as indicators are gospel.
Indicators are part of the confluences you need to identify and as any scientific hypothesis goes you need a range of confluence to conclude.
Another thing I thought was that my chart looking like a colouring book would make it easier to analyse just like the moonboys on CT.
Your chart doesn’t need to look complex to the point where you can’t even see the price. As technical analysis is extremely personal and you can have your methodologies but having 46 different colourful indicators and pink and blue triangles everywhere will not help.
You can only use technical analysis when you are trading and it’s not really for investors?
You need to use technical analysis to help you find the best entry and exit points regardless of whether you are trading, investing or whatever.
There are a range of different myths when it comes to technical analysis but remember, it’s very personal and if you can explain your analysis and stick by it, the better you will get.
Inevitably no process will go well without using as many tools as possible in your arsenal.
The more things you are better at, the more chances you get at winning. It’s important to have your focus and what you are good at but a lot of people while investing tend to ignore the technical side of things due to the association with day traders.
Using weekly, daily and 12hr timeframes while analysing you get a better chance of getting the best entry point on your investments as well as being able to identify market conditions which are insinuating you to get out.
We are going to continue the creation of beginner content as bearish conditions are the best conditions to further your knowledge. If you aren’t learning while the price is down, you will make mistakes while the price goes up which is where you are meant to be making money.
As a reminder this is not a trading signal, it is an opinion and each trader/investor should know and understand the risks attached to trading. At no point should this be regarded as financial advice
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