How to use the price action for the success of Cryptocurrency
The trading of cryptocurrencies can be a high risk game, with a high reward, and one of the most effective strategies used by successful traders is the analysis of price action. Studying the price movements of cryptocurrencies such as Bitcoin, Ethereum and others, traders can get valuable information on market trends and make the knowledge of the case to improve their trading success.
What is price action analysis?
The analysis of price action involves examining the graphic models and price movements of a cryptocurrency to understand its general feeling and impulse. This approach focuses on short -term prices, rather than long -term fundamental trends or elements. Studying price actions, traders can identify key support and resistance levels, predict future price movements and make more informed trading decisions.
Why use prices action for cryptocurrency trading?
Here are some reasons why the use of price action analysis is essential for cryptocurrency trading:
- Risk management : Price action analysis helps traders manage the risk by identifying potential entry and exit points based on historical data. Analyzing the price level, traders can establish stop-bloss orders and limit their losses.
- Input and output strategies : Price action analysis provides traders tools they need to create effective entry and output strategies. Studying the graph patterns, traders can identify the right time to buy or sell a cryptocurrency based on its relative force index (RSI), momentary indicators and other market movement factors.
- Detection of the moment : cryptocurrency prices tend to move in specific ways when it comes to their technical analysis indicators, such as moving environments, relative resistance index, etc. By studying these patterns, traders can identify trends and predict future price movements.
- Market feelings analysis : Price action analysis gives traders a better understanding of the market feeling, identifying key levels of support and resistance. This helps traders to make the knowledge of the case to buy or sell a cryptocurrency according to the current conditions of his market.
How to use the price action for trading success
To effectively use price action analysis, follow these steps:
- Choose the right graph : Select a graph that shows relevant technical indicators, such as RSI, MACD, Bollinger Bands, etc.
- Identify key support and resistance levels : Study the graph to identify key support (bought) and resistance (sold) levels.
- Analyze the price movement models : Notice the price movement models in relation to the elected technical indicators.
- Search reversal points : Identify potential reversal points in which prices tend to jump or reverse.
- Set the input and output rules : Create input and output rules based on the identified models, using stop-light controls and orders, as the case may be.
Examples of price action analysis in cryptocurrency trading
Here are some examples of analyzing prices in cryptocurrency trading:
- Bitcoin (BTC) : Looking for a powerful level of $ 5,000 -6,000 USD, where Bitcoin tends to come back.
- Ethereum (ETH)
: Identify a fierce reversal point at $ 400 -500, where the Ethereum price tends to reverse and win an impulse.
- Litecoin (LTC) : Analyze the Litecoin chart to identify a strong support level at $ 100 -150, where it is known to have returned after each major correction.
Tips for Success Price Action Analysis
To improve your price -action analysis skills:
- Stay up -to -date : Pay attention to market news and developments that can affect cryptocurrency prices.
- Combine with fundamental analysis : Use fundamental analysis tools such as news, social media and economic indicators to make knowledge.
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