This October, we have seen analysts in the Bitcoin (BTC) market repeatedly warn of a market death – known as the crossover between the short-term moving average (MA) and the long-term MA. limited knowledge of technical analysis.
Technical analysis (PTKT) is the art of forecasting future price movement by studying and analyzing charts of past trading data. Common phenotypes will be shown through the aforementioned data aggregation charts. These patterns will be compared and analyzed with the patterns that have appeared before, and based on these analysis, statisticians make predictions about future price movement. .
The death cross, in technical analysis, is understood when two 50-day moving averages of an asset go down and intersect the 200-day moving average. The appearance of such a crossover is considered by analysts to be the beginning of a downtrend: The last time it appeared in the Bitcoin market, in March 2018, the price fell for more than 9 years. the next month.
The market’s death cross began to appear on October 25, 2019. Bitcoin closed at $8,662 that day, and over the next few weeks, Bitcoin fell by more than $2,000. Some analysts attributed this drop to the Chinese authorities’ aggressive measures against the cryptocurrency market. However, the “followers” of technical development think that all are shown on the chart.
“Once a market’s death cross occurs, the market is in a downtrend,Big Chonis commented. Big Chonis is a Twitter account with 43,000 followers and a user who specializes in commenting on PTSD in Massachusetts. This user asked for permission to remain anonymous to separate himself from the Big Chonis brand. He also shared that he makes $3,000 to $4,000 a week as a full-time trader, all thanks to technical analysis.
For traders in the traditional financial world, the fact that you can make money or even avoid losing money just by looking at the indicators or the blue lines on the charts is not convincing (it is not yet). including journalists and other market observers). But for the Bitcoin market, PTKT is a survival tool. Binance, one of the largest cryptocurrency exchanges in the market, said in a November 22 report that PTKT is the most used trading strategy in the digital asset market, second only to the digital asset market. high frequency trading strategy (algorithmic trading with high frequency, fast rotation and high order-to-trade ratio).
Technical analysis was born for trading types based mainly on historical data. For stocks, technical analysis is superior to basic analysis from traditional business data, factors such as revenue, profit, EPS,…. This statement was made in a research paper conducted by three Israelis. Many “believers” in the crypto market also share the same opinion and think that technical analysis is an essential tool in the Bitcoin market because we have no basis for fundamental analysis for assets like Bitcoin. Even now, the market is still unclear as to whether Bitcoin is a currency, a store of value, or a form of digital “gold.” Some even think that these are just awards to make the engine for the world’s largest blockchain can continue to operate. Or all of the above.
“Without fundamental analysis news, users can only rely on information such as charts, price or is the transaction volume. Here [PTKT] is a genre of ‘dark’ art.
There are not too many bases to cling to, traders can only trust the charts. Classical technical analysis will tell us when the price of Bitcoin will continue to fall, what this candlestick pattern says or what will happen if another pattern emerges, in other words you should “Be patient” to wait for the market consolidation phase.
Big Chonis himself also recognized the limitations to technical development and the applicability of this strategy. On his personal page, he said he doesn’t have many diversified price predictions: “You’re right, I didn’t say sell, sell, sell, or buy, buy, buy, because all are subjective opinions. .”
Interestingly, although many investors scoff at predictions based on technical analysis, they always keep an eye on the continuous chart because most of them are correct. Traders often look at key support and resistance levels based on market reaction and activity.
Based on such prices, many traders even set up their systems to automatically sell if Bitcoin’s position falls below a certain threshold. This is called a stop-loss order or people joke that it is a “cut before you take on more losses”. “Once the stop-loss orders tripled, the price movement accelerated, and it wasn’t long before the futures market rookies naturally “REKT”. That is, traders using large leverage will be liquidated by margin orders. The continuous sell-off from such liquidity will have the effect of causing the price of Bitcoin to fall even further.
As chief investment officer at Blockforce Captal in San Diego said:
“If you understand what other people are doing, you will understand each of your positions better. Basically technical development is based on technical development.”
Below is a summary of interviews from 7 professional traders in the market and their analysis of their views on technical analysis:
Greg Cipolaro from Digital Asset Research
I am not a fan of PTKT. But if I feel it’s reasonable and right, I’ll use it, but since I don’t use it much, it doesn’t sound convincing. Without real news, people can only rely on charts, prices, and volume. And then it’s no different when we are playing Forex or trading short-term commodities. Unfortunately that’s not my playground. There are many times when you look at resistance or support levels, like $9,000 or $10,000. The market will reverse after breaking these levels, but I think that’s just because so many people are looking at the market the same way.
Joe DiPasquale Specialist at BitBull Capital
At Bitbull, technical engineers are an important part of how we manage our capital. In addition, we also combine with news analysis to make judgments about volatility patterns or downside/upside limits. Since the crypto market is generally speculative, technical analysis will tell us about key indicators such as price movements, especially support or resistance areas. The near-early end-of-October rally fueled by a media frenzy from China is the clearest proof yet of the volatile nature of the market, with support back in the $8,100 region. The technical analysis tells us that the peak made after the news of President Xi Jinping is not sustainable and the price will return to the old level. Using PTKT, we can confidently trade in the style of buying low and selling high. For example, in the last year, Bitcoin has grown 44% while the BitBull Opportunity Fund has grown 101%, 2.3 times.
David Martin from Blockforce Capital
When I entered the market in 2016, I really only relied on technical analysis. I don’t understand what Bitcoin is and how it can be useful in practice but I just want to trade because the market is extremely volatile. I rely solely on support and resistance levels, periodic waves and the fibonacci technique. We do not use such methods with a mutual fund. We mainly use artificial intelligence algorithms. But I still believe that technical analysis is really a powerful tool in the crypto industry because other than that, you have no other information to analyze. If you trade Apple stock away, you may have to consider a lot of other macro factors that affect the price of the APPL token. Technical analysis at this time is only a small part compared to the basic analysis. So with Bitcoin, if you understand how people are thinking, it will be easier for you to understand how you should trade. It is like technical analysis about technical analysis. Once you know what people think support and resistance levels are, you’ll be good at placing orders by reading how market players are understanding the market.
Martin Garci from Genesis
Traders only care about technical skills. They are just people who “take the bait”, but investors are different. When making a trading decision, they also consider the macro environment, they look at the fundamental analysis, and then they look at the charts. In general, PTKT is almost correct.
Dan Matuszewski, former Circle trader and now CMS Holdings collaborator
I think PTKT is a kind of “secret technique”. We want to know when people stop trading, but when we execute trades we also try to find market inefficiencies and arbitrage.
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