September, 2022 - Someshwar Srivastava

Crypto requires clarity with various tools. These resources play a major role in assisting you to gain a clear picture of where the market stands and also make accurate forecasts. The crypto market is volatile, and a knowledge of technical analysis of cryptocurrencies is a must.

Keeping up with all the graphs, charts, etc. regarding crypto can be a difficult task indeed. As soon as you learn about crypto technical analysis & the working of the market the entire system will be understandable. A brief analysis is done in this blog which you will find out as you go further.

What is Technical Analysis (TA)?

Crypto Traders use real-world data & use it to predict the future predictions of the market or other sources. You can determine when the market will rise or fall according to the data. That will help you to buy when the price is low and sell when the price is high.

Mastering the art of “analyzing” is a talent that requires practice, trial, & error until it is perfect. Many have written about the most acceptable way of studying the market & getting perfect results. In order to become a good trader, you must understand the observable components on a price chart & understand how they influence the price.

Meaning of a Crypto candlestick & it’s Working

The candle stick is one of the first TA aspects you may have to deal with while studying the market. On a price chart, these may appear as either green or red.

A coin’s opening balances are shown in a rectangle. After 24 hours of searching, the candle stick will show you how much of a price change there has been. It is possible to tell if a stock is losing or winning money by looking at the color of the sticks.

Moving Averages

More information than the volume of sales & trend of candle sticks is necessary to predict a coin’s price chart movement. It is important to consider price fluctuations over a period of time. Making sure when to purchase & sell is necessary.

To examine a price chart, the simple moving average (SMA) or Exponential Moving Average (EMA) is used. Many people consider it an accurate predictor of the moving averages futuristic behavior.

Exponential Moving Average (EMA)

Although the SMA is more straightforward to use than the EMA, it is more complex. EMA considers how same the current day’s pricing is to yesterday’s pricing. That gives the previous days more weightage than the coming days.

Analyzing the trend

Fully prepared to examine the price chart of a certain coin, you will be able to determine when to purchase & when to sell. These tools & resources will give a rookie trader enough knowledge to start off his trading career.

Ending Off

Investors are interested to know more than just crypto technical analysis before investing.

It is, however, important to remember that no technical indication is 100% accurate. Even with all favorable indications, prices may respond differently. The best thing a trader can hope for is improvement in the face of making an informed decision.

Starting Off

Market Psychology is the idea that the fluctuations of a market reflect the emotional stage of the investors. It is one of the main topics of an interdisciplinary field that investigates the different variables that precede economic period called behavioral economics.

Many are under the perception that emotions are the main driving force behind the shift of the finance & crypto markets. The overall varying investor & trader sentiments are the so-called psychological market cycles.

In reality, when the market goes bull, it is likely due to an improving personality & confidence among the traders. A positive market causes demand to increase & supply to decrease. Further, the increased demand may cause a stronger attitude among the traders. Similarly, vice versa in the case of a negative trend.

Market Psychology usage by Investors & Traders

If the market psychology is valid, understanding it will help a trader to know when to enter or exit a market at favorable times. Generally, the attitude of the market is counter-productive- high financial opportunity when the market is down & vice versa.

Traders & investors use this info to buy when prices are low & sell when prices are high. But, recognizing these points is not as easy as pie.

Technical Analysis & Market Psychology

Analyzing previous data makes it clear what decisions or action items would have been profitable. But, in fact that’s not the case.

The market change is difficult to understand & even difficult to ascertain the next plan of action. Many investors use Technical Analysis (TA) to get an idea where the market is heading.

The TA indicators are essentially tools that can be used to obtain a measure of the psychological state of the market.

Cognitive Biases

Common thinking patterns that often cause traders to make rash decisions are called Cognitive Biases. Some common examples are-

Loss Aversion- the common tendency of investors to fear a drop in profit more than a gain. This often causes traders to miss good opportunities to make profits during the period of market capitulation.
Endowment Effect- The tendency to overvalue things that people own simply because they own it. For example, an investor that owns crypto is more likely to believe it has more value than someone who doesn’t own crypto.
Confirmation Bias- Can be defined as the tendency to overvalue information that confirms what investors already know. Strong market investors will focus on the positive news while ignoring bad news or negative symbols that market will fall.

Ending Off

Most traders & investors will say that psychology plays a critical part in impacting the market cycle & market prices. Investors need to be vary of not only the market psychology but their personal psychology as well & how it will affect their decision-making ability.

An Analysis of the Crypto Market- By Someshwar Srivastava

Market Cycles Psychology- A Brief by Someshwar Srivastava

Month: September 2022