cryptocurrency: Technical analysis for beginners: a guide of optimism (op) and commercial indicators
As the first decentralized digital currency in the world, Bitcoin has revolutionized the way we think about money and commerce. With its volatility, unpredictability and rapid growth, cryptocurrency trade can be fascinating and intimidating. In this article, we will deepen the basic concepts of technical analysis for beginners, focusing on the optimism (op) indicator and key trade indicators.
What is technical analysis?
Technical analysis is a method to analyze financial data to predict price movements. It implies examining pictures, trends and patterns to identify possible purchase or sale signals. This approach differs from the fundamental analysis, which focuses on the intrinsic value of an asset and the underlying economic factors.
Optimism Indicator (OP): A guide for beginners
The optimism indicator (OP) is a popular technical analysis tool used to measure the strength of a trend. Developed by Peter S. Goodman in 2002, this indicator is based on a simple but powerful concept:
“Optimism = (1-Momento in the short term) + (short-term impulse x strength)”
In simpler terms, optimism measures how much impulse is still present in the short -term trends of security, while explaining its strength. When the OP OP indicator falls below 0%, it indicates that the trend has lost the impulse and may be reversing.
How to use the optimism indicator (op):
- Choose a technical indicator: Select an adequate technical indicator, such as the stochastic oscillator or the relative resistance index.
- Calculate the short -term moment: Calculate the short -term impulse by dividing the current price by the simple mobile average (SMA) of 3 periods.
- Combine strongly:
Add the short -term calculated moment to its force value.
- Apply the OP rule: If the optimism indicator falls below a certain threshold, it is a purchase signal.
Commercial indicators: a guide for beginners
Now that the optimism indicator (op) has dominated, we will immerse ourselves in the key trade indicators used in the cryptocurrency trade:
- Stochastic oscillator (14 period):
* Buy when the stochastic %K is above 20 and the %d of stochastic D is less than 20.
* Sell when the stochastic %K is below 20 and %of stochastic D is greater than 80.
- RSI (relative force index) (14 period):
* Buy when RSI % falls to its lower bollinger band and RSI % is greater than 70.
* Sell when RSI % rises to its superior Bollinger and RSI % band is less than 30.
- Bollinger bands:
* Buy when the price is broken through the lower band, indicating a possible investment.
* Sell when the price is broken through the upper band, which suggests a continuation of the trend.
Combining indicators for a winning strategy
To create a comprehensive commercial plan:
- Use a combination of indicators: Combine optimism (op) with stochastic oscillator indicators and RSI indicators to identify possible purchase or sale signals.
- Adjust the parameters: Adjust the indicator parameters, such as windows and threshold sizes, to adapt to their negotiation strategy.
- Establish the stop losses and take the profits: Set the loss of clear stop and take the profits to protect your investment.
Conclusion:
Cryptocurrency trade can be an exciting but challenging effort. By dominating the technical analysis using the optimism (OP) indicator and key trade indicators such as the stochastic oscillator, the RSI and the Bollinger bands, it will be on its way to developing a winning strategy. Remember, technical analysis is just a tool among many that merchants use to make informed decisions.
Remember:
- Always establish realistic expectations for your trades.
- Control and continuously adapt your strategy as market conditions change.
- Never invest more than you can afford to lose.