Classical analysis in trading relies on reading price action and historical patterns to predict the next move. Its main components include:



Fundamentals of Classical Analysis.



  • Bullish Trend: Higher highs and higher lows.


  • Bearish Trend: Lower highs and lower lows.


  • Sideways Trend: Price moving within a range.


Trend Tools:



  • Trend Lines


  • Price Channels


  • Moving averages



2. Support and resistance


The strongest elements of analysis.



  • Support: A zone where price is expected to bounce back up.


  • Resistance: A zone where price is expected to drop.


The more times the price bounces, the stronger the zone.



3. Price patterns (Chart Patterns)


Reversal patterns:


Indicate trend change:



  • Head and shoulders


  • Inverted head and shoulders


  • Double top


  • Double bottom


Continuation patterns:


Indicate trend continuation:



  • Triangles


  • Flags


  • Pennants


  • Rectangles


Visual examples of classic patterns


Head and shoulders – double tops and bottoms


Triangles, flags, and pennants



4. Trading volumes (Volume)


Volume confirms the move.



  • Uptrend with strong volume = true buying power.


  • Uptrend without volume = potential trap.


  • Breaking support/resistance with strong volume = usually a real break.



5. Candlesticks


Shows buyer and seller behavior.


Famous patterns:



  • Hammer


  • Hanging man


  • Bullish and bearish engulfing


  • Doji


Examples of candlesticks



6. Price gaps (Gaps)


More crucial in stocks but appear sometimes in crypto.


Types:



  • Normal gap


  • Breakout gap


  • Continuation gap


  • Exhaustion gap



7. Technical indicators


Not the foundation of classic analysis but are helpful tools.


The most famous ones:



  • RSI


  • MACD


  • Bollinger Bands


  • Stochastic



8. Ratios and retracements


Like Fibonacci to determine:



  • Correction zones


  • Targets


  • Potential reversals


Common example:



  • 0.618


  • 0.5


  • 0.382




9. Risk management


Without it, the analysis fails no matter how strong.


Includes:



  • Stop loss


  • Trade size


  • Risk-to-reward ratio


  • Avoid entering with emotion



10. Market psychology


Understanding market sentiment:



  • Fear


  • Greed


  • FOMO


  • Accumulation and distribution


This makes a huge difference, especially in crypto.



Strong classic analysis is often a blend of:



  • Trend


  • Support and resistance


  • Price model


  • Volume


  • Confirmation candles


And not relying on just one element.