Technical analysis is a method used to predict future price movements of a financial assets, like cryptocurrencies, by analyzing past price data and trading volume. It's based on the assumption that all relevant information about a cryptocurrency is already reflected in its price, and that historical patterns can be used to identify potential future trends.   

Key Components of Technical Analysis:

Charts: These are graphical representations of price data over time. Common chart types include line charts, bar charts, and candlestick charts.   

Patterns: These are recognizable shapes or formations within a chart that can indicate potential price movements. Examples include head and shoulders, triangles, and flags. 

  

Indicators: These are mathematical calculations derived from price data that can help identify trends, overbought/oversold conditions, and momentum. Some popular indicators include moving averages, Relative Strength Index (RSI), and MACD.   

How Technical Analysis Works:

Identify Trends: Technicians look for upward or downward trends in price.   

Spot Patterns: They identify patterns that might suggest a continuation or reversal of the trend.

Use Indicators: Indicators are used to confirm trends, identify potential support and resistance levels, or generate buy/sell signals.

Make Trading Decisions: Based on the analysis, traders make decisions about when to buy or sell a cryptocurrency.   

Note: While technical analysis can be a valuable tool, it's important to remember that it's not infallible. Market conditions can change rapidly, and past performance is not always indicative of future results.

Let's look at an example with Toncoin

The horizontal line drawn above is called a support line. It can help you predict what the price of Toncoin could be in future.

How you may ask?

Well, if the the price of Toncoin drops and touches that pink line, it could be rejected; which means that the price could start rising from there..

It will usually take a strong selling pressure to cause price to break a support zone or level. If this happens, it could signal a further bearish trend but sometimes if a support line is broken, it could be a fake out which is usually a trick from institutional traders to trap retail traders.

Now, that's is it for this episode, we are going to look at another aspect of technical analysis in my next article and please don't forget to follow me here and also on my YouTube channel that goes by the name "Brigxel Biz" for more educative content on crypto