Technical analysis is one of the requirements that if you want to become a professional trader in the digital currency market, you must be familiar with it from zero to one hundred. Reading price charts, identifying supports, resistances, and most importantly having a comprehensive view of charts are all achieved by mastering the principles of technical analysis and practicing this skill. Here are some practical and simple technical analysis tips that can help you improve the quality of your trading.
Closing of the candles
Traders use support and resistance levels to find entry and exit points for their trades. Key supports and resistances are very important in trading. Confirmation of the breaking of resistances and supports or their resistance to falling and rising prices is usually determined by the closing of the candlesticks. Depending on the time frame in which the support level is drawn, we need to check the closure of the candlestick at the correct time frame. For example, if Bitcoin has repeatedly reacted to a support level in the 4-hour timeframe, closing the candle 15 minutes below that level cannot confirm that the support has broken. For this purpose, the closure of candles of 4 hours and above should be checked in the diagram.
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Valid and false fractures
Trading volume can be used as a confirmation tool to ensure that resistance is broken. If the closed candlestick has a smaller volume compared to the average trading volume in the last few periods, it can not be considered as a valid failure. If the strength of the trend decreases in the next few candlesticks or the next candlestick closes in the form of a descending engulfing below the resistance, then a false failure has occurred and by examining the situation, one can enter the selling position.
Of course, if you have marked your key levels with lines and not as an area, passing a candle shadow over them can also be considered a false failure. Some cautious traders wait up to one or two candlesticks to confirm the breakage of key levels after closing on resistance or under support to enter a buy or sell position with more confidence.
Divergence in price charts is a simple but practical point that can be obtained by juxtaposing price trends and indicators such as Makdi, OBV or RSI. Divergences come in four forms, the most common of which are positive and negative divergences, which in the first form the indicator of higher floors but lower floor prices. In case of negative divergence, the indicator makes the ceiling lower and the price of the ceiling higher. The reduction of volume candlesticks, in which a sharp rise in price has occurred and which has a relatively larger volume than the volume candlesticks before and after, is another reason for the decrease in the strength of the trend.
Identifying divergence in the chart is not difficult, but it can well inform you of a change in trend and preparation for buying or selling situations. By participating in the Atlas Digital Value course, you can learn and practice divergences along with complete technical analysis training in the form of a 13-hour training video with the support of experienced instructors.
Try trend lines in indicators
You might think that trend lines, supports and resistances only apply to the price chart, but this is not the case. You can also implement all the principles and rules of technical analysis such as wave counting principles, Fibonacci levels and trend lines in indicators such as the RSI index and be aware of market momentum changes. The use of this method is perhaps less well known, and due to the variety of indicators, the trader is free to try different combinations to form his own specific methods and strategy.
Move from frame time up and down
It does not matter if you are a price action trader or a trader based on indicators; If you want to check the price chart at different time intervals, it is better to move from higher timeframes such as weekly to lower timeframes such as daily and 4-hour. This way you will be aware of the general trend and key levels, and for example, if the overall market trend is downtrend, you will be more careful when trading and buying. Of course, the definition of higher timeframes for a daily trader or scalpel is different, and in their view, a 4-hour chart may be considered a high timeframe.