How To Use Technical Valuation In Cryptocurrency
How to use the technical assessment in cryptocurrency
The cryptocurrency world has experienced enormous growth and adoption in recent years, the prices fluctuating wildly in response to the feeling of the market. However, beyond the speculative nature of this market is a precious tool that can help investors make informed decisions: technical assessment.
Technical evaluation is an approach to assess the value of cryptocurrencies according to their fundamental properties and technical indicators, rather than relying solely on market prices movements. In this article, we will immerse ourselves on how to use the technical assessment in cryptocurrency, by exploring its advantages, its limits and its best practices.
What is technical assessment?
The technical assessment consists in analyzing the price of a currency, the volume of negotiation and other technical indicators to estimate its value. This approach focuses on the underlying factors that stimulate the market, rather than simply examining market trends or speculation. Using technical indicators, investors can identify models and trends that may not be immediately obvious from market data.
Key technical indicators
To start with the technical assessment in cryptocurrency, you will have to familiarize yourself with certain key indicators commonly used:
- Relative force index (RSI) : a Momentum oscillator which measures the action of recent security prices compared to its price range over time.
- Bollinger strips : an indicator of volatility which draws two mobile averages of the price of a title, showing how it was negotiated above and below the average.
- Divergence of Mobile Average Convergence (MacD) : an oscillator of Momentum which measures the relationship between two mobile averages, helping to identify trends and inversions.
- Stochastic oscillator : a momentum indicator which draws a percentage of higher price or less than a mobile average in time.
How to use the technical assessment in cryptocurrency
To apply a technical assessment in cryptocurrency, you will need:
- Choose a motto : Select a specific cryptocurrency to assess, such as Bitcoin (BTC) or Ethereum (ETH).
- Collect the data : Gather the historical data of prices and negotiation volumes for the selected currency.
- Analyze the indicators
: Use the chosen indicators to create technical analysis graphics and identify the models.
- Evaluate trends and inversions
: Look for signs of acceleration, deceleration or inversions of trends using the identified indicators.
Advantages of technical assessment
The technical assessment offers several advantages:
- Improved precision : By focusing on fundamental properties rather than market price movements, technical assessment can provide more precise predictions.
- Reduced risk : Investing in cryptocurrencies with strong technical support and tendency models can reduce the risk of significant losses.
- Cauvaise Transparency : The technical assessment provides a clear understanding of the underlying factors stimulating the value of a currency.
Limits of technical evaluation
Although technical assessment has its advantages, there are also certain limits to consider:
- The context is essential : The technical assessment must be used in conjunction with feeling and market analysis, because prices can be influenced by external factors which may not be directly linked to the underlying fundamentals.
- Complexity : The technical assessment implies a range of indicators, which can be complex to interpret and require significant expertise.
- Over-southasia on price movements : although technical assessment is based on fundamental properties, it is essential to remember that prices are volatile and likely to change.
Best practices
To make the most of the technical assessment in cryptocurrency:
- Use a combination of indicators : Combine several technical indicators to identify models and trends.
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