Why Technical Analysis is so vital in Trading - TA Course Part 2

1. Future trends follow past trends

Human beings are a predictable bunch, and we generally do the same things over and over again. This also applies to trading, because certain patterns emerge and repeat themselves, and we can use the patterns to somewhat accurately predict price movements.

2. We’re all looking at the same charts

Individual human beings are less good at predicting things than a group of humans predicting the same event, the “wisdom of the crowd” if you will. How this relates to cryptocurrency trading is that as there are thousands of us looking at the same chart, we will generally come to the same conclusion and make similar moves to one another.

3. The current cryptocurrency price includes all available data

Even data that isn’t widely or publicly available will be factored in (this is the advantage that so-called “insiders”) have over the rest of the trading population. Thus, we can assume that the current price of the cryptocurrency is correct.

All technical analysis can be broken down into 2 main chart patterns:

1. Continuation Patterns - Where the price of a coin is expected to keep trending the same way it is currently moving.

2. Reversal Patterns - Where the price of a coin is expected to reverse from its current trend (I.e. a coin’s price is expected to stop falling and start rising)

The following are some of the basic, and most essential chart patterns you need to know. You can get by with an in-depth knowledge of these, and having a deeper knowledge of the basics charts is better than having surface level knowledge of many charts.

For more in-depth reading on technical analysis, I having a recommended reading list at the end of this course.

See you in the next part of technical analysis course. Till have a great day!