Two main tools are used to analyze cryptocurrencies: technical analysis and fundamental analysis.

Technical Analysis

It relies on studying historical price charts and trading volume to predict future price movements. The most important indicators used are:

* Relative Strength Index (RSI): Used to determine whether the currency is in an overbought zone (index above 70) or an oversold zone (index below 30).

* Moving Average Convergence Divergence (MACD): Helps identify trend momentum and potential reversal points.

* Moving Averages: Provide indicators for the overall price trend.

Fundamental Analysis

It focuses on the intrinsic value of the cryptocurrency by studying factors such as:

* Market Capitalization: Reflects the size of the currency and the level of interest from investors.

* Currency Project: Understanding the technology, team, and partnerships that support the currency.

* News and Events: Keeping track of market developments, such as regulatory updates and global economic news.