Analysis Basis - Analysis in Bitcoin Trading

Technical analysis is based on three factors common when trading the Bitcoin Crypto Currency price charts. These 3 common factors when it comes to the Bitcoin market are:

Bitcoin Prices Move in Trends
Market Price Action Discounts Everything
History Tends to Repeat Itself When it Comes to Bitcoin Price Moves

Prices Move in Trends

Bitcoin price movements follow trends - a market trend is a general price direction either upward or downward. When it comes to Bitcoin the prices of Bitcoin follows trends and this means that once a market trend in a particular direction is formed then prices keep heading in that particular direction for a period of time and the future movement direction of the price is likely to be in the same market direction as that of the Bitcoin price trend than for it to be against it. Most of the Bitcoin strategies are based around this market concept.

Therefore analysis in will be the study of how to figure out this price trend so as to know and determine which direction the prices of Bitcoin are likely to head and move to next & henceforth help the online trader to know which side of the trade to take.

Price Action Discounts Everything

In trading analysis, the only thing considered when it comes to this trading analysis is the market price movement or what's commonly referred to as price action. Technical analysis study assumes that at any given time, the price of Bitcoin reflects everything which has or could affect the movement of the Bitcoin prices. This trading analysis therefore only studies the price action - which is the product of Supply and Demand of Bitcoin.

History Tends to Repeat Itself When it Comes to Price Moves

History tends to repeat itself mainly in the chart patterns of the price action. This repetitive nature of the price patterns is attributed to investor and trader psychology. This is because the online traders participating in the trading of Bitcoin tend to provide a consistent reaction to the market for most of the time. Technical analysis study uses these price patterns that are commonly referred to as chart patterns to analyze and interpret the movement of Bitcoin prices. Although the chart patterns represent historical data, these trading analysis patterns are still relevant because they show patterns which often repeat themselves.

Understanding analysis when trading Bitcoin prices can be a helpful method which the online traders can use in determining when the market is trending and when it is not trending. When the prices of Bitcoin are heading in one particular direction then as a btc/usd trader you want to be on this trade - but if the market is not trending then as a btc usd trader you don't want to be trading in this market because all you'll do is lose money because you will be caught by many whipsaws and as investors this is not what we want.

Unfortunately, most of the BTC/USD Crypto traders try to fight the market trends and buy or sell in the direction that is the in the opposite market trend of these trends - in an effort to pick a market top or a market bottom, only to see the market move further in direction of the continuing trend.

Another common mistake that traders often make when they are caught up in the wrong market direction is to add onto losing positions in the hope that once the trend reverses they will make money back faster by averaging down their losses.. This is however not a good trading strategy especially in a strongly trending market - it is something which the experienced traders never do, because they know that once prices start heading in a particular direction they continue moving in that particular direction for quite some time. "The Trend is Your Friend" is a popular saying among investors, never go against the market trend.

This study of trading analysis aims at alerting traders and investors of high probability trading setups that bitcoin traders can use to figure out when to open Bitcoin trades. Profits in trading the online Bitcoin market come from using proven analysis methods to find the trend direction and taking trade transactions on the same direction. However, there are no certainties in the market and BTCUSD traders must practice until they create high probability patterns that they can use to trade the online market profitably. One way of doing this is by opening a practice demo account & practice strategies on this practice account until traders learn how to generate trading profits using the high probability setups that they will have come up with after learning more about the various trading analysis concepts used in trading BTCUSD.

About Analysis

With so many investors & traders using the same analysis tools, the analysis becomes a self fulfilling prophecy. This is because if so many investors use the same level as a buying point, the Bitcoin price then moves upwards as everyone makes similar moves at the same time.

The next question is how long these moves will last and hence traders must develop methods understanding Bitcoin chart moves so that as they can know how to figure out when to open and when to close their Bitcoin trades.

In analyzing this Bitcoin prices, the Bitcoin charts are used together in combination with indicators to look for chart patterns that have occurred in the past under certain conditions and when these chart patterns are noted again under similar conditions then traders can use these setups to figure out whether if to open buy/sell trades - and traders will be making trading decisions with increased probabilities of success because these trade setups have happened before, and made the price to move in a particular direction - and traders can trade based on the same set-up as before.

Learning How to Trade Bitcoin Prices Successfully with Technical Analysis

To know how to trade Bitcoin successfully using analysis it is important to understand the 3 strategies outlined below:

Bitcoin prices will always follow a market trend which can be identified by looking at the market price patterns of Bitcoin prices. In financial trading, Bitcoin as well as other instruments the only proven method to consistently earn profits in the online markets is by following a trend. "The Trend is Your Friend" is a popular saying among investors & traders because following trends when chart patterns is the most consistent method of making profits when trading Bitcoin Cryptocurrency and other financial instruments, as a btc/usd trader, never go against the market trend.
The market forces of supply and demand for Bitcoin will drive the prices of Bitcoin up or down depending on the current factors. The demand for Bitcoin may go up when the world economy is doing well and people have more money to spend on luxury items and also for investing. Technical analysis study will seek to measure these demand supply forces based on the current chart patterns of Bitcoin prices and with the help of the various indicators. The supply and demand of Bitcoin will be reflected in the Bitcoin price action - therefore by simply looking at the price movements traders can predict which direction the price of Bitcoin is likely to head towards. Traders also can use an additional technical indicator such as the MA, the RSI or support & resistance levels indicator to help them determine the next likely direction of the Bitcoin price charts.
The market not only indicates the history of the past prices, but also will follow the market trend which was in place until its direction reverses. Traders can use indicators such as the moving averages, Bollinger bands or trend-lines trading analysis tools & indicators to help them determine current trend direction.

On the other hand, when there is no direction, when there is no trend & the market begins to move in a sideways oscillating kind of manner - the market is said to be consolidating. When the market begins to consolidate, BTCUSD CryptoCurrency traders should wait until the market stops consolidating because during this time there will be no trend to trade and prices will keep oscillating around a single place without heading in any particular direction.

Once the consolidation stops, prices will start heading in one or the other direction and new trends will be formed and traders can start placing trades in direction of the newly formed trend.

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