How To Spot Trends Using Price Action Analysis

Stop trends in cryptocurrency: a guide for beginners using the price action analysis

In the world of cryptocurrency, trends are a crucial aspect of investment. While technical indicators can provide valuable information, Price Action Analysis offers a more intuitive way of identifying trends and making informed investment decisions. In this article, we will explore how to use the price action analysis to detect trends in the cryptocurrency.

What is the analysis of the price action?

The analysis of the price action is a method that focuses on the visual behavior of prices during market hours, instead of depending solely on technical indicators such as graphics and oscillators. It is based on the idea that past performance is not indicative of future results, but reflects the current market state.

How to use the price action analysis in cryptocurrencies

To apply the analysis of the price action in the cryptocurrency, follow these steps:

• Select a cryptocurrency : choose one or more cryptocurrencies that you are interested in investing. Popular options include Bitcoin (BTC), Ethereum (ETH) and others.

• Open a graphics platform : Choose a good reputation graphics platform that admits multiple currency spares. Some popular options include Binance, Coinbase and Kraken.

• Create a tendency line : Use of the “trend” function on the chosen graphics platform, create a trend line that connects two high or low pricing maximums within a specific period (for example, 1 hour , 4 hours or 1 day). This will help visualize the market management.

• Identify support and resistance : Use the line of trend to identify areas where prices tend to recover or continue moving in the same direction. These are generally called support levels for purchase and resistance levels for sale.

• Search for divergences : Divergence occurs when a trend indicator (as a mobile average) shows a strong contrast to the price action. This may indicate that the trend can be investing, pointing out a potential opportunity for purchase or sale.

• Use candles patterns : Analyze the form and formation of candlesticks in your graph to identify possible reversals or continuations of trends.

• CONSOLIDATION MONITOR : Consolidation periods are characterized by price stabilization around a support level or resistance zone. These can be followed with caution, since they can indicate a potential reversal.

Common price action patterns

• Head and shoulders (H&S) : A classic pattern where the neckline is formed between two levels of resistance and the head is formed on top.

• DOJI : A candle pattern characterized by a upper wick that extends beyond the lower wick, indicating a lack of conviction in the price action.

• Trend investment patterns : such as the hammer, the fleeting star or the bullish envelope.

Tips and tricks

* Use multiple time frames : Analyze the price action in different time frames (for example, 1 hour, 4 hours, 1 day) to identify trends that may not be visible in a single table.

* Pay attention to volume : Changes in negotiation volume may indicate a possible investment of trends or continuation.

* Note market handling : Price action analysis should not be used as a means to manipulate the market. Always carry out thorough investigation and consider multiple sources before making investment decisions.

Conclusion

Price Action Analysis offers a unique perspective on cryptocurrency markets, allowing investors to detect trends and make informed decisions based on visual behavior instead of technical indicators alone. When applying these techniques, you can obtain a deeper understanding of market dynamics and increase your chances of successful operations.

Remember, invest in cryptocurrencies entails significant risks, and it is essential:

• Always do your own research

• Establish clear investment objectives and risk tolerance

• Never invest more than you can afford to lose

Happy graphic!

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