Introduction to Technical Analysis – Digital Currency Exchange

Introduction to Technical Analysis

Introduction to Technical Analysis

Introduction to Technical Analysis

Welcome to the first edition of Technical Analysis with Andres!

Every Monday, I will be publishing a new edition of technical analysis of your favorite cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), and other altcoins. In addition, I will be publishing technical analysis of other assets and financial markets to get a general idea of ​​which markets are up and which others are down, and if there is any correlation between those markets and the cryptocurrency market.

Before I begin, I would like to formally introduce myself. My name is Andres Manrique, and I am the managing partner of Digital Currency Exchange (USA). My career as a technical analyst started 5 years ago in the United States when I decided to enroll in a trading school. Since then, I have been trading different assets such as stocks or ETFs, Forex, and financial instruments as options. My interest in cryptocurrencies arose from the fact that I started working for an investment firm located in Palm Beach Gardens, Florida. In this company I have the title of “crypto specialist” since I coach hundreds of clients around the world to understand the different platforms (CeFi and DeFi ) that are used to buy, sell, convert and store cryptocurrencies. In the company, technology, adoption to the real world, and interoperability of hundreds of cryptocurrencies are analyzed and according to the model a rating is assigned to each of them.

Now, going fully into this first article, let's understand what is technical analysis? . Technical analysis is the study and interpretation of data such as the history of the price of an asset, the volume of transactions in a given time, or another type of indicator that is derived from the price or volume. This type of analysis is used to predict changes in the price of an asset in the future. The objective of this analysis is to be able to maximize profits and reduce the risks of losses in the purchase and sale of assets. Below is a graph showing the price of Bitcoin and the volume of transactions in the last 6 months.

 
     Tradingview. Bitcoin / USD (Daily TF / Log Scale)

On Wall Street, known as the largest financial district in the world, financial analysts have two different ways of studying a market or asset, these are through fundamental analysis and technical analysis. One of the pioneers in using fundamental analysis and generating abundant wealth is Warren Buffett. This tycoon, generated a lot of wealth by investing his money buying shares of public companies that were "undervalued." This means that the value of a share is sold in the market for a price that is presumed to be below its true intrinsic value. Some of the factors that Warren Buffett usually considers in his analysis are, for example, the performance, debt, or profit margin of a company. To do this analysis,

On the other hand, studying charts showing financial asset price fluctuations is becoming more popular with analysts and investors. Technical analysis has many theories that support the use of this. For example, I am a fervent believer that all external factors are discounted in price. Charles Dow, called "The Father of Modern Technical Analysis", was the first person to articulate the concept that every external factor (political, social, financial, or speculative) that can affect the market or price of an asset, it is already discounted in the price.

Another of the theories that support technical analysis is that it is assumed that the price is determined by the interaction of supply and demand. For this, one of the factors that determines supply and demand is the expectations of buyers and sellers. Expectations result from human decisions, and these decisions are based on information (can be precise or perceived), emotions (fear, greed, expectation), and cognitive limitations such as behavior and feelings biases originated from chemical and electrical connections within our brains [1]

In the next articles I will delve into these theories with concrete examples. If you have any questions, feel free to email me at andres@digitalcurrencyexchange.us .

 

Note: The information you find in these articles is not financial advice. Your investment in cryptocurrencies or another asset has to be proportional to your level of understanding of it.

 

Until next time!

 

[1] Source: Book: Chartered Market Technician I