It relies on reading price charts.
Main tools:
Support and Resistance:
The price tends to bounce from certain areas (support) or faces difficulty in breaking through (resistance).
Indicators:
RSI (Relative Strength Index): Determines if the currency is "overbought" or "oversold"
MACD: Shows the trend direction
Candlestick patterns: Provide signals for upward or downward movement
👉 Example:
If RSI is above 70 → possibility of a decline
If below 30 → possibility of an increase
2. Fundamental Analysis
Focuses on the strength of the project itself.
Looks at:
The team
The utility of the currency (does it have real value?)
Partnerships
Number of users
News
👉 Example: A currency like Bitcoin is strong because it is the first currency and has high trust
A currency like Ethereum is strong due to smart contracts
3. Market Sentiment Analysis
Depends on the psychology of investors:
News (Positive / Negative)
Twitter and Reddit
Fear and Greed (Fear & Greed Index)
Steps to analyze any currency:
Look at the chart (upward or downward trend)
Use RSI and MACD
Read the project news
Monitor trading volume
Do not invest all your capital