Technical Analysis for Beginners: How to Start Understanding Charts and Making Better Decisions?
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Have you heard terms like "support" and "resistance" or "candlesticks" and didn't fully understand them?
Technical analysis is an important tool for every crypto trader. Here are the key basics to start with confidence:
1. What is technical analysis?
It is the study of price movement on the chart with the aim of predicting future trends.
It relies on price patterns, trading volumes, and tools like moving averages and indicators.
2. Support and Resistance
Support: A area where the price stops falling and rebounds upwards (strong demand).
Resistance: A area where the price stops rising and rebounds downwards (strong supply).
> Example: If the price of BTC refuses to drop below 60,000 several times, this is a support area.
3. Candlesticks
Each candle represents price movement over a time period (e.g., 1 hour or 1 day):
Body = the difference between open and close.
Wicks = highest and lowest price during the period.
> A green candle means an increase, and a red one means a decrease.
4. Common Technical Indicators
RSI: Measures the strength of the movement (overbought or oversold).
MACD: Helps identify reversals.
Moving Averages (MA): Gives an idea of the overall trend.
5. Don't trade based on just one indicator!
Use a mix of tools, and don't forget to manage your capital.
Summary:
Technical analysis doesn't give you the "future price," but it is a tool for understanding the market and making decisions.
