What is Technical Analysis? | CryptoWallet.com

What is Technical Analysis?

Technical and trend analysis are ways of evaluating crypto market activity using charts and statistics to capitalize on and take advantage of patterns or deviations from the mean. Technical analysis generally refers to all statistical analyses of markets, while trend analysis is a method of technical analysis that focuses on determining whether or not a current trend (such as a price rising or falling) will continue or not. 

What are examples of trends? 

An example of a trend would be the price of a certain cryptocurrency (say Litecoin for example) having a steep move upwards over a certain period. Properly utilizing trend analysis, in this case, would mean determining whether or not the price would be likely to continue to rise (continuing the trend) or to fall (breaking the trend). 

Trends do not need to be specific to a certain cryptocurrency. Another example of a trend would be a type of cryptocurrency (for example, Proof-of-Stake coins) generally rising in value in comparison to Proof-of-Work coins.

Does technical analysis work? 

There is much debate over the efficacy of technical analyses in markets. While the prevailing opinion is that technical analysis can work for skilled practitioners the reality is that it is difficult for the majority of market participants to make money using technical or trend analysis, particularly on shorter-term trades that require both technical and emotional acumen.