Charts
Charts in technical analysis include:
- Line Chart: Simple way to track price changes over time.
- Candlestick Chart: Candlestick charts are most preferred chart in technical analysis as it shows more details , there are two main components of a candle in a candlestick chart
- Candle Body: This the opening and closing prices
- Candle Wick: This shows the highest and lowest price point
Bullish Candlestick Patterns
These patterns indicate a potential increase in price:
Hammer
The hammer candlestick pattern forms at the bottom of a downtrend it shows that the prices are at its lows point and are ready to be reverse ( go up ).
Inverted Hammer
The inverted hammer candlestick is a less bullish than hammer candlestick. It shows that the prices are at the lowest and there might be a trend reversal
Bullish Engulfing
Bullish engulfing is a two candlestick formation. There is one short red candle that is completely engulfed by a big green candle. It shows a potential trend reversal
Piercing Line
This is a two candlestick formation where first day the crypto price are influenced by the seller and the next day its influenced by the buyers.
Morning Star
A morning star is a three candlestick formation that is interpreted as a bullish sign. Morning star formation following a downtrend market shows a reversal of trend.
Three White Soldiers
Three white soldiers are a candlestick formation that indicates a shift from downtrend market to a uptrend
Bearish Candlestick Patterns
Bearish pattern shows that there will be a possible decrease in prices and a potential shift from uptrend market to downtrend
Hanging man
A hanging man candlestick formation is formed on the top of a uptrend market that shows that there is a potential trend reversal its just opposite of hammer.
Shooting star
This candlestick is just opposite of a inverted hammer it indicates a change in market trend here the wick is twice the size of candle body.
Evening star
It is a three candlestick formation after a uptrend market. It indicates that there is a reversal in market trend .
Three Black Crow
This is a pattern of three candlesticks indicating a potential trend reversal .
Dark cloud cover
This candlestick pattern sows that a shift of momentum to the downside following a price rise.
Continuation patterns
A continuation pattern that forms within a trend that generally signals a trend continuation
Doji
A candlestick formation with nearly the same opening and closing resembling a cross it indicates a limited trading range.
Spinning Top
A candlestick formation with nearly the same opening and closing resembling a cross it indicates a limited trading range.
Falling Three Method
A candlestick formation with nearly the same opening and closing resembling a cross it indicates a limited trading range.
Rising Three Method
A candlestick formation with nearly the same opening and closing resembling a cross it indicates a limited trading range.
Indicators & Oscillators
Indicators and oscillators are mathematical calculations based on price and volume that help traders identify potential market reversals or continuations
Simple / smoothed moving average (SMA):
Simple moving average ( SMA ) smooth the price data over
a period of time for user to identify market trends and potential trend reversal these are often used in
period of 50-days , 100-days and 200-days.
For example: If the current price of crypto is above the SMA line then this indicates a uptrend and if it’s
below the SMA line this indicates a downtrend
Exponential Moving Average(EMA):
An exponential moving average is a technical indicator that tracks
prices changes over time
Its more responsive to price changes than a simple moving average (SMA )
Moving Average Convergence / Divergence (MACD)
The MACD indicator is made up of a MACD line,
single line and the histogram
The MACD is most popular indicator for identifying the market trend and bullish or bearish crossovers
For example: If the line crosses above the single line it shows a bullish crossover and if it goes below
the single line it shows a bearish crossover
Relative Strength Index ( RSI )
This technical indicator is used to identify that a crypto Is overbought (
too expensive ) or oversold ( too cheap )
For example if the RSI index of a crypto is above 70 the crypto might be overbought and if its below 30
its oversold
Bollinger Band
Bollinger Band helps traders understand how much a price moves (volatility) and whether it's too high or too low. It has three bands:
- Middle Band: A simple moving average that shows average price.
- Upper Band: The SMA plus a certain number of standard deviations (Shows the higher range).
- Lower Band: The SMA minus the same number of standard deviations (Shows the lower range).
Examples:
- When prices touch the upper band, it shows overbought.
- When prices touch the lower band, it shows oversold.
- When the bands are wide apart, it shows that the market is volatile.
- When the bands are close together, it shows that the market is calm.
