Technical analysis (TA) has been used to trade crypto since its inception. Traders claim that through careful analysis of historical data and focus on price, volume, and related indicators it is possible to identify patterns and predict outcomes. Here are a number of key indicators and mechanics commonly used for trading crypto.
Also read: Everything You Need to Know to Start Trading Cryptocurrencies
Technical Analysis Is Controversial
There are a number of ways to use TA to trade cryptocurrencies. Many experienced day traders have been applying Bollinger Bands, Moving Average Convergence Divergence (MACD), Stochastic, the Detrended Oscillator, and Fibonacci Retracement in a bid to gain insights into where the market will go next.
Some are more sceptical of TA. Angus Champion de Crespigny, an advisor to blockchain projects and a former EY blockchain lead, says that when it comes to TA, some methods can be controversial in traditional markets, let alone a relatively new market such as crypto.
“Considering we are dealing with a brand new market, I think we should be careful with anyone stating with confidence that they know what the price will be in the short term. Maybe I’m missing something but I am curious how TA theses for this market could have been proven when the market is still evolving on a monthly basis,” said Crespigny.
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