Technical analysis is a tool used by traders of different levels of experience, and seeks to establish trends, whether bullish or bearish channels, support and resistance lines, and even reversal indicators.
This Bitcoin analysis is based solely and exclusively on the assets’ trading history, that is, it assumes that all news and events are priced. Its objective is to identify the best buying and selling points according to situations that frequently occur in each scenario.
Above is a classic example of technical analysis: the bullish, bearish, and sideways channel.
Those who believe that only day trades, very short-term movements, can use this Bitcoin analysis are mistaken. Even investors looking to HODL, looking to “buy and hold” for the long term, can benefit.
Can Bitcoin Analysis Predict a Downturn Today?
As stated earlier, technical analysis is not an exact or precise science. Thus, it is impossible to predict movements with accuracy and great assertiveness.
Even if there were a foolproof formula, little by little investors would find this Bitcoin analysis technique, making its return close to zero.
However, a well-executed technical analysis may bring signs of trend reversal, which may or may not materialize. Therefore, it is incorrect to say that this Bitcoin analysis can predict a drop today.
For this, it is important to study and buy different currencies or invest in a fund with the main currencies on the market.
What are the other types of Bitcoin analysis?
As the blockchain data, this shared database, is public, it allows the analysis of the movement of all addresses. Although it is not possible to identify the “owner” of each currency, it is possible to segment them by size, date and time of transfers, among others.
This transaction log tracking model is known as onchain analysis. The Bitcoin Market has a partnership with the company specialized in this segment, “Into the Block”.