1. Introduction 2. Chart Basics 3. Trend Lines 4. Indicators 5. Putting It All Together

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Hugh Rogers
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1 Technical Analysis: A Beginners Guide 1. Introduction 2. Chart Basics 3. Trend Lines 4. Indicators 5. Putting It All Together Disclaimer: Neither these presentations, nor anything on Twitter, Cryptoscores.org, or any other medium/mode of communication, including private correspondence, constitute financial advice. Cryptoscores.org is not a financial advisor and hold no formal qualifications in this area. Trade entirely at your own risk. This is for entertainment purposes only.

2 Introduction The purpose of this guide is to introduce technical analysis to novice traders for the first time. Technical analysis is difficult by nature, however it can be broken down and made simpler. There are plenty of resources out there that offer a more advanced description on the topics we will cover. This guide does not cover the different trading strategies and risk management strategies, those will b covered in another guide. Technical analysis makes use of charts and statistics to evaluate the emotions behind a specific market. The analysis is conducted with different types of indicators and chart patterns. Technical analysis however, can be very misleading especially to novice traders. It does not provide a crystal ball that will tell you exactly what will happen. It s important to gain experience and education before trading with real capital. With that said, when used correctly and in pair with fundamental analysis, a trader can become very profitable. I personally like to explain to novice traders is that fundamental analysis should tell you what to invest in, while technical analysis should provide you with when. Chart Basics A basic chart may look intimidating at first, but with some time and practice it is designed to simplify the price movement and behavior of an asset. First, it is recommended to use the candle stick style graph. This style is by far the most popular among traders because it provides a clear picture of price movement. The picture below breaks down candle stick graphs. The top and bottom lines are referred to as the wicks the price moved within the wick range but closed within the candle body. Candle stick graphs can be looked at on different time frames. When the time frame ends, the candle closes ad forms a new one. The time frames of the chart are important to understand. Using a classic candle stick style graph there are two different time settings to be aware of. The time of the candlesticks and the time frame for the entire chart. The candles sticks refer to the time in which a candle will stay open. A 5 min candle stick for example will include all price movements for 5 minutes then it will close and form the next candle. The time frame for the other chart will be the time frame to observe the entire chart at. This could vary from a couple hours to multiple years. It s important to understand that using a longer time frame for the candles captures a much larger collection of prices. A smaller time frame will have less. The result is very simple, a larger time frame gives a better understanding of overall price movement, while a smaller one gives more detailed and volatile picture.

There is no perfect or one size fits all time frame, it all depends on the type of the trade.

3 Choosing the right time frames is a very important part of a trader s analysis, however it is somewhat simple. If a trader is trying to identify long term trends, then they will use a longer time frame, and vice versa. There is no perfect or one size fits all time frame, it all depends on the type of the trade. Trend Lines Now that we understand the difference in time frames on a graph lets dive into a very simple tool for identifying trends in price. Trend lines, are one of the most useful tools in TA, they are also incredibly simple to use. A trend line uses a drawing tool to map out certain trends in the price. There are different types of trend lines. First off, Support lines, these lines identify a price at which an asset has a tough time breaking down through. The line visually is acting as a floor and is supporting the price. This is important because if an existing support line is broken with ample sell volume, that is very bearish. The above image is an example of BTC support line. The 1,2,3 represents 3 separate time that the price bounced off of a support level, then the highlighted are on the right finally saw a break through and the result was a price plunge. Resistance lines, are the opposite of support lines but drawn the same way. A slightly angled or horizontal line that represents a price that hasn t been broken through. Instead of a floor this price acts as a celling for the price, once broken this is a very bullish signal. The image above is an example of a resistance level for BTC. It s important to understand if the price breaks this level it s a sign of strength in the price and a bullish sign. A failure to break through a price is a sign of weakness and the result will be bearish movement. Its clues like these that an analyst uses to interpret the behavior and psychology present in the market. Is an assets strong in growth or weak?

An example below is a downward trend of BTC that lasted several months.

4 Upward trends and Downward trends are similar to resistance and support lines. A downward trend would typically see lower and lower highs being formed and a line would be drawn to represent them. An example below is a downward trend of BTC that lasted several months. Once a downward trend line is broken that is a very bullish sign and could mean the start of an upward bull trend. An upward trend is the opposite of a downward trend and will typically see higher and higher lows in the price. The following example is an upward trend in BTC.

Indicators There are many different indicators out there. In my opinion it is important not to over use indicators and use an almost minimalist approach to technical analysis.

5 Indicators There are many different indicators out there. In my opinion it is important not to over use indicators and use an almost minimalist approach to technical analysis. It s important to understand that no one indicator can create a crystal ball that will predict exactly what the price will do. With proper analysis we can only make predictions, but never formulate market certainties. Volume, arguably the most important indicator. Volume provides us with the amount of transactions in the market between buyers (green) and sellers (red). High volume in the green will always include an increasing price while decreasing volume in green and increase in red is a sign of a dropping price. The following example shows the volume indicator in the highlighted box. As you can see during times of high volume the price was increasing rapidly. More importantly however, is what the volume represents about the market on a broader scale. The volume reveals how many people are actively trading an asset; it captures the level of interest in the asset. We can use this to interpret the level of demand, a low amount of volume represents low interest and demand.

Just that that it includes two different lines one being the signal line and the other being the MACD line, when the MACD crosses under the signal line that is Bearish and when the MACD crosses

6 Moving averages can be a very useful indicator as well. Most traders use a MACD Moving average convergence divergence, since this is a beginners guide we won t explain the math that goes behind the averages. Just that that it includes two different lines one being the signal line and the other being the MACD line, when the MACD crosses under the signal line that is Bearish and when the MACD crosses upward on the signal line that is a bullish signal. The MACD is very useful for identifying changes in momentum and reversals in price trends. The following example shows a cross downward and as you can see a start of a downward trend in the price. RSI, the relative strength index. This an extremely useful indicator and is very easy to interpret. The RSI has a highlighted area usually between 30 and 70. When the RSI goes reaches out of the highlighted area (>70,<30) that indicates that it is being overbought or oversold. This gives us an idea of the strength in the direction of the price and when an asset is over bought or oversold know that that is not sustainable and it will more than likely dip back into the highlighted area.

Last but certainly not least, the Bollinger Bands. These Bands include two lines or bands that represent 2 standard deviations away from the moving average line in the middle.

7 Last but certainly not least, the Bollinger Bands. These Bands include two lines or bands that represent 2 standard deviations away from the moving average line in the middle. In periods of low volatility these bands contract and come closer together. Subsequently, when the bands contract and come very closer together it s a very high probability that a breakout is coming soon. The bands don t indicate which direction, just that a break out is coming. Thus, a very profitable strategy can be to place orders to catch either direction in a breakout with open buy and sell stops. The following example shows the Bollinger bands contracting and then a massive move upwards in the price. Putting it all together We have looked at the proper way to use trend lines and different indicators. The most difficult part of a trader s analysis is using these tools to form a thesis on the market. We use trend lines and indicators to form a conclusion on the state of the market for a given asset. For example, if an asset fails to break upwards through a resistance line and has low volume, that is an indication of weak buyers. It s a high probability that the price will fall hard. This would be our market thesis. It s important to remember a few things when forming a thesis. A thesis is what a trader ultimately executes trades upon, and we must always remember as traders that there are no certainties in the market. As a result, a trader must leave all personal bias, be prepared to change and adapt their thesis, and not be irrationally greedy. Recommended sites: Tradingview.com Recommended Exchanges:

Introduction. Technicians (also known as quantitative analysts or chartists) usually look at price, volume and psychological indicators over time.

Introduction. Technicians (also known as quantitative analysts or chartists) usually look at price, volume and psychological indicators over time. Technical Analysis Introduction Technical Analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. Technicians (also known as quantitative