Switching to market volatility in cryptocurrency with candle diagrams and RSI
The world of cryptocurrencies has always been characterized by a high level of variability. Prices can change significantly, which means that investors provide the direction of the market or even to determine if the currency increases or decreases. However, by combining technical analysis techniques, such as candlestick graphs and a relative force indicator (RSI), you can get a valuable perspective on market movements and make more conscious investment decisions.
understanding candle graphs
Candle graphs are a kind of technical diagram that visualizes the price over time. Each candle represents a single trading session with its own, high, small, close and volume. The shape of the candles can indicate different market conditions, such as stubborn trends or bear, range defects or reversal models.
RSI (relative resistance indicator)
RSI is an indicator that measures price changes in a certain period. It calculates the ratio between profits and losses and strengthens large losses, which makes it more sensitive to recent price movements than other indicators. RSI oscillates from 0 to 100, with higher values indicating forged or exhausted conditions.
How to use candle diagrams and RSI in cryptocurrency
Switching to the variability of the market with diagrams with candles and RSI, follow the following steps:
- Identify key levels
: Look for key levels such as support and resistance areas, which may indicate potential or weakness.
- Candle patterns : Analyze candle shapes to identify patterns such as:
* Pullid absorption: a stubborn candle with a larger and smaller body than the previous day.
* Barish Enchulfing: Bewish candle with a smaller and larger body than the minimum on the previous day.
* Head and arms: three tips or three troughs that create a shape similar to the head and shoulders, indicating potential levels of support or resistance.
- RSI candles : Look for RSI candles that fall below 30 (overrold) or rise over 70 (overcrowded). These patterns may indicate the need to close the position or adapt commercial strategies.
Example: Success Trade based on candle graphs and RSI
Suppose you are a cryptocurrency seller who uses candlesticks and RSI to analyze market movements. Suppose you identify a strong stubborn candle with an open over 10,000, followed by a low -level candle bear below 9500.
candle graph:
|. Date open high low near
|. — | — | — | — | — |
|. 2023-02-20 | 15,000 17,000 12,000 16,500 |
RSI candle:
|. Given the value of the RSI
|. — | — |
|. 2023-02-19 | 30 (overcome)
Based on these models, decide to close the position and buy at the 9750 assistance level.
Application
The transition to the variability of the market in cryptocurrency requires a combination of technical analysis techniques, such as candles and RSI graphs. Understanding key levels, identifying candle models and using RSI candles to evaluate uniform or exhausted conditions, traders can make more conscious decisions regarding the purchase and sale of cryptocurrencies. Remember to always analyze the graph and adapt your strategy based on market movements.
Additional Resources:
* Books: “The New Trading was” by Marek Douglas
* Web sites: Cryptoslat, Investopedia
* Podcast: Podcast Crypto Trader, Podcast Coindesk
Given the candles and RSI graphs for the investment strategy, you can better understand the market movements and make more conscious decisions to achieve success in the cryptocurrency market.