The Details of Technical Analysis | Gate.io Blog

Q: Today let's go to the details about Technical Anallysis that is following last week's topic.

A: Here we go.

1.There are many sect of investment, of which fundamental analysis and technical analysis are the two main sects.

2.In the cryptocurrency market, technical analysts account for the overwhelming majority, and they are martial arts that everyone must practice.

Q: Sounds interesting. Let's go through it one by one.

A: Sure, let's move on.

What is technical analysis?

1.Traders engaged in technical analysis believe: "Future price trends can be speculated to a certain extent through trading history, and strongly assume that such a pattern is traceable and stable."

2.The basic assumptions of technical analysis are as follows:

1).Market prices reflect all information.

2).Past history can be applied to future trends.

Conclusion:

"Technical analysis is a kind of knowledge that uses patterns, indicators, and price and volume trends to estimate future trends from historical transactions in the past."

What types of technical analysis are there?

Technical indicators: Calculate certain numbers with reference significance through calculation formulas, and conduct transactions based on them.

The technical analysis is the analysis of transaction volume and transaction price, which reflects the overall market sentiment.

Technical analysis is based on this assumption and has derived many analytical tools, the following are the common ones:

MA - Moving average

KDJ

RSI

MACD

BOLL - Bollinger Band

Conclusion:

Different analysis tools will result in different opinions and trends, so veterans usually refer to multiple indicators at once, or even create their own analytical tools/indicators.

The so-called typology is mainly analyzed through the "pattern", and the "candle pattern" is generally used to observe the market trend.

The common types are as follows, which will be taught in depth in future articles:

Bottom W

Top M

Head and shoulders

Reversed Head and shoulders

Conclusion:

Technical indicators and Typology are usually used together-to determine "entry and exit signals" by technical indicators, and "long and short trends" based on typology.

Why do most people in the crypto market use technical analysis instead of fundamental analysis?

1.Less public information in the crypto market.

The emergence of the cryptocurrency market has only been ten years, and the development history of stocks has exceeded three hundred years, so there will be less public information in the market.

2.The crypto market is prone to trading signals.

"Severe volatility will bring more opportunities to make money." Under these conditions, the use of technical analysis will be more convenient and effective than fundamental analysis.

3.The crypto market is dominated by retail investors.

We all know that the knowledge threshold of general fundamental analysis is relatively high (also called value investment in the market), so most retail investors prefer to use technical analysis as their main investment strategy.

4.Technical analysis applied to the issue of the crypto market.

Insufficient transaction information, too short history.

There is no answer to these questions. As traders, we can only continuously optimize our abilities and adjust trading strategies according to the situation.

Different trading systems.

Cryptocurrency is a 24-hour uninterrupted trading, and there is no upper or lower limit, resulting in very high volatility, and it is very likely that a big reversal will occur when the trader is sleeping.

This has led to the emergence of program trading, allowing automatic robots to learn technical indicators and automatically place orders (such as grid trading), which is also a future trend.

Exchanges capability are uneven.

Each exchange has its own quotation, and the trading system is also different.

Unlike traditional finance, cryptocurrency exchanges are not regulated by the government. The credibility behind many exchanges is insufficient.

5.The problem of technical analysis itself

Technical analysis cannot reflect the true value: Because technical analysis only looks at prices, investors cannot know the true value of assets in this way.

Technical analysis needs to be combined with a stop loss strategy: because each analysis method has its own winning rate, so when the trend is not as expected, you must have the good habit of strictly implementing the stop loss.

Q: Thanks for all, let's go to Question Session.