Bitcoin is a volatile asset with large price swings. The cryptocurrency follows multiple timeframes, so your technical analysis must also follow multiple timeframes. It’s important to keep an eye on the 4-hour candlesticks because these are the most relevant for short-term traders who want to catch quick trends and make fast profits from them.
But it’s not enough to just look at a one-time frame; you should also look at longer ones like weekly or monthly charts if you’re interested in long-term trading strategies that require holding positions for several days or weeks before closing them out with profits.
What is Bitcoin Price Analysis
Bitcoin BTC price analysis is the process of analyzing the technical indicators that affect the price of Bitcoin. There are many factors that can influence a cryptocurrency’s price, including supply and demand, news, and hype. In this article, we’ll examine some of these factors in more detail.
A good way to understand how Bitcoin works are by learning about its underlying technology: blockchain technology (also known as distributed ledger technology). The blockchain is basically an open ledger where everyone can see every transaction ever made on it by everyone else who uses it–and this makes it impossible for anyone, in particular, to control or manipulate your money without your consent.
This means no more banks: if you want access to your funds then all you need do is provide proof-of-work by solving complex mathematical problems using specialized hardware called ASICs which cost thousands upon thousands ($10k+) but aren’t really necessary because there are plenty other ways (like buying them off someone else).
How to read Bitcoin price analysis?
Bitcoin price analysis plays an important role in Bitcoin trading. Reading them can help you make better decisions when trading on an exchange. The biggest mistake that people make when reading Bitcoin price analysis is not understanding how to read charts. There are many different types of charts you can use to get the most out of your studies.
You should also be aware of the difference between candlestick charts, bar charts, and line charts. Each type has its own strengths and weaknesses; therefore, knowing what chart to use for your study is a must-have skill for a trader.
What affects the price of Bitcoin?
Bitcoin’s price is determined by supply and demand. The more people who want to buy Bitcoin, the higher its price will go. And vice versa: if more people are selling Bitcoin than buying it, then its value will drop accordingly.
There are many factors that can affect the supply and demand for Bitcoin–and thus influence its price–such as media attention (good or bad), government regulations (positive or negative), political events (like elections), and economic factors like inflation rates or interest rates from central banks around the world.
Basic Technical Analysis Tools and Indicators
Basic technical analysis tools can be used to help you determine the direction of a cryptocurrency’s price, including ETH price movement. These tools include:
Candlestick charts are a type of financial chart that displays the opening, closing, and high-low range of a security or market index over a given period of time. They also show whether the day’s trading was positive or negative by using colors to represent this information.
The candlestick is named after its resemblance to an old Japanese-style candle used in temples before electricity became available. The body portion represents either the opening or closing price; depending on whether it is hollow or filled out with white space (representing no change).
If there was an increase from one day to another then there will be lines extending out from both sides which indicate how much prices changed during that time period; these lines are called wicks/tails because they resemble flames coming off candles burning down at both ends (or even sometimes just one end).
Support and Resistance
Support and resistance are important technical indicators. They can help you determine the future direction of a price and make trading decisions.
For example, if the price action has been trending up for several days and then suddenly hits resistance at $7000, it’s likely that there will be an opportunity to sell short in this area.
The same goes for support levels: if you see that Bitcoin has been falling steadily since reaching its peak but then finds support around $6500-$6600, it may be a good time to buy back into Bitcoin if you believe that its price will begin rising again soon (or even short).
A trend line is a straight line that connects two or more price points on a chart.
The trend line helps you to identify the overall direction of the market, as well as its strength and momentum. For example, if you see several consecutive candlesticks with long tails pointing in one direction, it means there’s strong buying pressure in that direction; therefore, we can expect prices to continue moving up along this particular trend line until some kind of resistance is reached (a horizontal level).
Trend lines can also be used to help predict future price movements because they act like barriers for traders who are trying to enter into new positions at certain levels–if prices break through these barriers without hesitation or hesitation only briefly before returning back inside them again (i.e., “bouncing off”), then there’s likely still plenty more room left within those boundaries before they’re hit hard enough by sellers where they won’t be able to bounce back anymore
Moving averages are a popular technical indicator used to identify trends and spot reversals. A moving average is simply the average price of an asset over a given period of time–the most common periods being 20 days and 50 days.
A moving average can be helpful in determining whether your trade strategy is on track or needs adjustment, as well as giving you an idea of how far away from an asset’s current price it will likely get before it turns around again.
To calculate a simple moving average (SMA), add up all of your past closing prices for X days (where X = 20 or 50) and divide by X minus 1–the result is your SMA line.
Relative Strength Index (RSI)
Relative Strength Index (RSI) is a momentum indicator that compares the magnitude of recent gains and losses over a set period of time. It is used to measure the current strength of a security’s price movements, as well as identify overbought or oversold conditions.
RSI values range from 0-100; an RSI reading above 70 may be considered to be in overbought territory, while readings below 30 may indicate an oversold position. A value around 50 signals neutrality; i.e., neither bullish nor bearish bias in price movement direction at that moment in time.
Bollinger Bands are a technical analysis tool that uses standard deviation to measure the volatility of a security. They’re essentially an envelope that contains price action and can be used as a trend indicator.
The upper band represents the highest high in the last twenty days and the lower band represents the lowest low in the last twenty days. These bands will often widen out as volatility increases (when prices move up or down quickly) but will also contract when there is less movement in prices (when they remain relatively steady).
A break above or below one of these bands signals strong momentum toward either direction; however, it doesn’t necessarily mean that you should buy/sell immediately–it simply indicates that there may be more opportunity for gains if you choose to trade according to your strategy.