Short-term Trading: How to Use Technical Analysis Tools (Beginner's Edition) Want to use technical analysis for short-term trading? Don't be intimidated by complex indicators! Remember 3 types of tools + 5 practical tips, and beginners can quickly get started.
1. First Look at the Trend: Determine if it's an Uptrend or Downtrend?
Core: Go with the trend; don't fight against the big direction!
1. Moving Average (MA): Helps you highlight key points
Commonly used two lines:
50-day moving average (medium-short term): Price above → short-term rise, below → short-term fall.
200-day moving average (long-term): Break below it → long-term turns bearish, break above it → long-term turns bullish.
Key signals:
Golden Cross: 50-day moving average crosses above the 200-day moving average → Bullish, suitable for going long.
Death Cross: 50-day moving average crosses below the 200-day moving average → Bearish, suitable for going short.
2. Bollinger Bands: Find the boundaries of price fluctuations
Three lines: The middle is the 20-day moving average (mid-band), the upper and lower lines are the upper/lower limits of volatility.
Simple usage to remember:
Price above the mid-band, running along the upper band → Strong rise, pullback to the mid-band (e.g., ETH dropping from 1800 to 1700, mid-band support) can go long.
Price below the mid-band, falling along the lower band → Weak decline, rebound to the mid-band (e.g., BNB rising from 300 to 320, hitting mid-band resistance) can go short.
2. Then Find the Opportunity: When to Buy/Sell?
Core: Don't chase highs and sell lows; use indicators to judge whether it's 'overheated' or 'oversold'!
1. RSI Indicator: Tells you if it's gone too high/low
Value 0-100, below 30 is oversold, above 70 is overbought:
RSI < 30 (e.g., BTC drops to 22000, RSI=25) → Dropped too much, may rebound, light position to go long (quick in and out).
RSI > 70 (e.g., ETH rises to 2000, RSI=75) → Risen too much, may pull back, light position to go short (profit from a pullback).
Ultimate signal: Divergence (price and indicator move in opposite directions, higher win rate):
New price high, RSI not a new high → Top divergence, must fall.
New price low, RSI not a new low → Bottom divergence, must rise.
2. Volume: Verify the authenticity of the trend
Increased volume on rise/fall is more reliable:
Volume spikes during rising → True rise, can hold long positions.
Volume spikes during falling → True fall, can hold short positions.
