Bitcoin Technical Analysis for Beginners

Bitcoin is one such famous cryptocurrency. To invest in it, you need to understand the technical analysis behind Bitcoin. After all, without technical analysis, cryptocurrency trading becomes a dangerous guessing game!

This blog is a little technical, but it is intended to help beginners understand the basics of Bitcoin and how technical analysis can help them make informed investment decisions. If you want to be a successful cryptocurrency investor, then this blog is a good starting point.

Why Should Beginners Start With Bitcoin? If you are new to the world of blockchain and cryptocurrencies, it can become overwhelming to filter out reliable cryptocurrencies from unreliable ones. cost newbie investors a large portion of their investments. On the other hand, Bitcoin is a much safer (if not the safest) cryptocurrency to invest in. It is the first deflationary crypto-token to come into being and recently hit an all-time high (ATH) of over USD 65,000 per Bitcoin! Here are some more reasons to trust Bitcoin: 1. Most decentralized cryptocurrency 2. Deflationary token 3. Publicly available white paper 4. Proof of Work (PoW) mechanism 5. Crystal clear tokenomics

Technical Analysis: An Overview On the broader spectrum of things, there are two types of Bitcoin investors: 1. HODLers – People who buy Bitcoin with no intention of selling for several years.2. Traders – People who buy Bitcoin and intend to sell it quickly at a profit. If you want to grow your money faster than traditional methods by investing in Bitcoin, honing your technical analysis skills is critical. Technical analysis uses the concept of past price patterns and technical indicators to analyze the charts and predict the future movements in price. This can be applied to any market, including cryptocurrencies such as Bitcoin (BTC). If done correctly, technical analysis helps you accurately predict the lows and highs of Bitcoin prices over different time periods. Such predictions will help you make educated and data-driven decisions to buy Bitcoin at a good price and sell at a profit.

Getting Started with Bitcoin Technical Analysis Indicators To get started with technical analysis, you need a platform that offers reliable and advanced tools for the same. WazirX, an Indian cryptocurrency exchange backed by the world’s largest crypto exchange, Binance, offers all the necessary tools and more for a beginner to get started with Bitcoin technical analysis. Here are two indicators to start with for beginners: 1. Moving Average Weighted (MAW) MAW is used to measure the overall sentiment generally felt by the market. This is done by analyzing the price fluctuations in the appearance of the short, medium and long term moving averages. The moving average is calculated by simply taking the average of the data points in a given time period.

The above image shows the MAW of the BTC/USDT pair. By observation, you can conclude that when the MAW line (blue line) is above the bars, it indicates a downtrend. Likewise, when the MAW line is down, it indicates an uptrend. Note that MAW should preferably be used to analyze price movements over a shorter period (days or hours) and not over long periods such as months or years. 2. Relative Strength Index (RSI) RSI is a ‘momentum indicator’. It works by comparing the magnitude of recent growth with recent downturns to measure the speed and change of price movements. It oscillates between 1 and 100. It is a common belief that RSI should be below 30 for buying and above 70 for selling.

The picture you see above shows the RSI chart of the BTC/USDT pair. As you can see from the example, Bitcoin showed an uptrend every time the RSI hit a big low and a downtrend when RSI hit a high. In simpler words, the lower the RSI, the more undervalued the asset is.3. Williams Fractal This is a momentum indicator, and it is based on the ADX formula. While ADX can help you dive into the micro, Williams Fractal is a good indicator for a quick macroscopic view of the momentum trends. This oscillating indicator shows the strength of both the upward and downward movement in the price of an asset. Let’s illustrate this with an example of the BTC/USDT pair.

As you can see in the image above, most up arrows are accompanied by a decrease in price and most down arrows are accompanied by an increase in price. The disadvantage of this indicator is that it often produces several false positives. Therefore, it is advisable to use other indicators such as ADX and RSI in conjunction with Williams Fractal to make better trading decisions.

Fundamental analysis vs technical analysis Fundamental analysis is based on the idea that the price of an asset is determined by underlying factors such as the company’s performance, management and market size. On the other hand, technical analysis does not consider any economic or fundamental factors. It is purely focused on the chart and the indicators like RSI, MACD and candlestick patterns.

Conclusion To conclude, Bitcoin trading is definitely an exciting market, one that many people want to get involved in. However, it is important to understand the cryptocurrency market before you start trading. If you are interested in getting started with Bitcoin trading and understanding intricacies of technical analysis, get on board WazirX and start with as little as INR 100!

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