Introduction:
Buying when the market is rising and selling when it’s falling may seem like a smart move, but it’s risky. You could lose money in just one day. Traders who can’t access charts should learn about technical analysis.
Let’s start by learning the basics. In this blog, we’ll cover fundamental concepts like basic charts, candlesticks, downtrends, and uptrends.
Candlestick Basics:
Candles are categorized into different time intervals: 1 minute, 2 minutes, 10 minutes, 30 minutes, 1 hour, 12 hours, 24 hours, and 1-week candles.
In the first second, traders begin to buy and sell. Each candlestick represents the price movement within one minute.
The main part of the candlestick is the body, and the top of the body wick shows the highest price at which people bought during that minute, while the bottom wick shows the lowest price at which people sold.
At the 60th second, when the selling activity concludes, the candle’s closing position could be either higher (ending long) or lower (ending short) than where it began. The same process applies to all candlesticks.
There are two types of candles: bullish and bearish. Bullish candles are depicted in green, while bearish candles are shown in red.
If the opening price is lower than the closing price, it’s a bullish candle. If the closing price is higher than the opening price, it’s a bearish candle.
Learn technical analysis:
People knowledgeable in technical analysis buy into the market effectively and use it during trading to minimize losses.
For example, by looking at the chart showing Bitcoin’s price over the past week, we can determine if the market is in an uptrend or downtrend. We can also analyze any patterns that have formed during this time, such as the head and shoulders pattern. Then make predictions for the market.
Using RSI and Stochastic RSI:
To identify uptrends and downtrends, examine the 1-week chart. We will now look at one of the tools used to understand market trends.
To start, navigate to the Tradingview page. Then, select “Indicators and Strategies”. Next, search for RSI (Relative Strength Index) and Stochastic RSI. RSI is a tool that measures momentum in Bitcoin’s price( Bitcoin to Indian Rupees =5926153.18) movements on a graph.
A Simple Guide to Buying and Selling with RSI and Stoch RSI:
When the RSI is at 30, it means it’s oversold, and when it’s at 70, it’s overbought. This is one of the key indicators used to predict the market.
The Stoch RSI value ranges from 0 to 100. When it drops to 20, it’s oversold, and when it rises to 80, it’s overbought.
For instance, when buying Bitcoin, if the RSI is at 30 and the Stoch RSI is at 0 or at least 20, it’s a good time to buy Bitcoin.
To sell Bitcoin, consider the opposite scenario: the normal RSI should be at least 70, and the Stoch RSI should be at 100 or at least 80.
Check the previous market charts to see if this strategy is effective or not. This strategy is straightforward and easy to use for both buying and selling.
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Aim to achieve mastery in technical analysis:
It doesn’t guarantee a 100% success rate, but it helps to avoid losses. Learning technical analysis isn’t something you can master in a day.
it’s like navigating the vastness of the sea — it takes time and dedication to understand.
Conclusion:
To put it simply, jumping into market trends without careful thought can be risky and might cause you to lose money. It’s really important to understand technical analysis, especially if you can’t keep an eye on the markets all the time.
This blog taught you the basics like how to look at charts and understand what they’re saying about market moves.