In our previous article, we mentioned some tools and methods for discovering and tracking smart money in cryptocurrency. Then a friend left a message saying that he didn’t want to take shortcuts and still wanted to seriously learn some technical analysis. However, after searching on Google, he found that there was too much to learn. Is there any simple technical analysis quick start tutorial?
Actually, we have done some sorting out of technical analysis before, but they were scattered in different articles. We have not organized a systematic and complete tutorial (nor do we have any plans to do so). However, considering that some friends are confused in this regard, today we will give you another simple sharing on the topic of technical analysis, but we will only list some commonly used basic indicators. We hope that you can expand on this as a basis and use Google to improve yourself.
1. Support/Resistance
Prices are mainly driven by demand. As market demand concentrates, the downward trend may remain balanced at a relative position. If the price rebounds from a certain horizontal position many times, then we can regard this horizontal position as a support level. Usually, if you do swing trading, you can consider buying when the price approaches the support level. As shown in the figure below.
On the contrary, when the price is in an upward trend, it will also try to find a new high point. If the price reaches a certain level several times but fails to break through this level, then this level is the resistance level. Usually, if you do swing trading, you can consider selling when the price approaches the resistance level.
The support level and resistance level are relative. Sometimes, after the resistance level is effectively broken, it will become a new support level. Similarly, after the support level is broken, it may also become a new resistance level. As shown in the figure below.
In actual charts, we may see more box or flag patterns composed of support/resistance levels, as shown in the figure below.
Here we take SOL as an example and make a simple demonstration, as shown in the figure below.
Based on different patterns, we can determine the corresponding trends, including upward trend, downward trend, and sideways consolidation (no trend state), as shown in the figure below.
2. Interpretation of common forms
Based on the support/resistance level, in addition to the box and flag patterns, we can derive other different patterns, as shown in the figure below.
Here we take a few of the above figures to illustrate:
Head and Shoulders Top: The time for the two shoulders to form should be symmetrical, the target price is the vertical distance from the head to the neckline BD, and the falling target is ≥ CN from point F. As shown in the figure below.
Head and Shoulders Bottom: The time of the two shoulders should be roughly equal. When the price breaks through the neckline upward, the rising distance ≥ CN. As shown in the figure below.
Double top (also called M top): Points A and C are parallel, and a line through point B parallel to AC is called the neckline. After the market breaks the neckline, a downward trend is formed, and the downward target is the FB distance. As shown in the figure below.
Double bottom (also called W bottom): Points A and C are parallel, and a line through point B parallel to AC is called the neckline. After the market breaks the neckline, an upward trend is formed, and the upward target is the FB distance. As shown in the figure below.
Ascending triangle: occurs in an upward trend, and the upward target is the widest part of the triangle. As shown in the figure below.
Descending triangle: occurs in a downward trend, and the downward target is the widest part of the triangle. As shown in the figure below.
For more patterns, interested friends can directly search the corresponding names through Google to find more detailed information. In general, as long as you understand the above basic patterns, you can basically understand the K-line chart.
3. Interpretation of common indicators
In addition to the various forms of K-line in the chart, there are also many auxiliary indicators, which are also very helpful for analyzing trends, identifying entry and exit points, and market sentiment in trading. Because they can provide objective data to reduce our emotional trading and improve the accuracy of price prediction. As shown in the figure below.
Here we list a few commonly used chart indicators:
RSI (Relative Strength Index): This indicator is mainly used to measure the speed and change of price changes. Generally, RSI above 70 indicates overbought conditions (i.e. potential sell), while RSI below 30 indicates oversold conditions (i.e. potential buy). As shown in the figure below.
MA (Moving Average): This indicator is a trend-following indicator that smooths price data, usually using 50-day (short-term) and 200-day (long-term) MAs. A bullish signal occurs when the short-term moving average crosses the long-term moving average upward, while a bearish signal occurs when the short-term moving average crosses the long-term moving average downward. As shown in the figure below.
BOLL (Bollinger Bands): This indicator mainly provides a volatility insight to identify overbought or oversold conditions. If the price hits the lower band, it indicates a potential buy. If the price hits the upper band, it indicates a potential sell. As shown in the figure below.
For more chart indicators, interested friends can directly search for the corresponding names through tradingview to find them.
In addition, the K-line chart is also analyzed based on multiple time frames. For example, if you like to make multiple transactions in a day, you can consider looking at short-term charts (such as 5m, 15m range charts). If your trading frequency is not that high, you can consider looking at 4H, 1D range charts.
In short, if you like to do swing trading, then the above technical indicators may be more effective for you. When doing specific operations, it is recommended to set the take profit/stop loss, such as setting the stop loss target of the trading robot below the buy support level, and avoid excessive greed.
But if you are a long-termist, then I would suggest you to pay less attention to the K-line and directly refer to long-term indicators such as AHR999, Rainbow Price Chart, MVRV ratio (MVRV Z-Score) for operation. As shown in the figure below.
At the end of this article, let's take a look at some other news worth paying attention to in recent days:
On July 3, it was reported that Bittensor was hacked, resulting in the suspension of on-chain transactions. Affected by this incident, the price of TAO tokens also fell sharply in the short term. As shown in the figure below.
On July 2, Circle obtained the first EU MiCA license, becoming the world's first stablecoin issuer that complies with MiCA regulations. That is, the company's US dollar stablecoin (USDC) and euro stablecoin (EURC) now comply with the EU's newly introduced stablecoin regulations MiCA. MiCA is the first cryptocurrency regulatory mechanism in the EU and the world. As shown in the figure below.
On July 1, data showed that Polkadot spent 11 million DOTs (worth $86 million) in the past 6 months, of which $37 million was spent on promotion (advertising or giving to influencers), but Polkadot still doesn't seem to have attracted much attention on X and elsewhere. Currently, Polkadot controls $245 million (38 million DOTs) of assets on 3 different chains, of which $188 million (29 million DOTs) are liquid assets. Some netizens have calculated that if Polkadot continues to burn money at its current rate, they will go bankrupt in less than 2 years. As shown in the figure below.
On July 1, Amber Japan was officially renamed S.BLOX, which means Sony has planned to restart Whalefin and launch a cryptocurrency exchange in Japan. Quetta Web, a subsidiary of Sony, acquired Amber Japan (Whalefin) in August 2023. As shown in the figure below.
On July 1, according to Lookonchain monitoring data, the German government transferred 1,500 bitcoins (about 95 million US dollars) and currently still holds 44,692 bitcoins. As shown in the figure below.
On July 1, Gemini (a digital asset trading and custody service company) signed a 5-year Bitcoin sponsorship agreement with Peter McCormack's football club. As shown in the figure below.
This is the end of our sharing of this issue. This is also the 479th article updated by Hualihuawai. For the data references and image sources involved in the main text, please refer to the corresponding date articles of Hualihuawai Notion version.
Disclaimer: The above content is only a personal point of view and analysis, and is only used for learning records and communication, and does not constitute any investment advice. The encryption field is a high-risk market. In addition to various forms of fraud and pig-killing schemes, many projects also have the risk of returning to zero at any time. Please look at it rationally, improve risk awareness, and do not touch it if you don’t understand it.
