Main points
- TA Works in Crypto — Human psychology (fear/greed) creates repeating patterns in any market
- Start With 5 Indicators — RSI, MACD, Volume, Moving Averages, Bollinger Bands
- Multiple Timeframes — Higher TF = trend direction. Lower TF = entry timing
- Support/Resistance is King — These levels are where battles happen
- Volume Confirms Moves — Breakouts without volume often fail
- TA is Probabilistic — Improves odds, doesn't guarantee outcomes
What is Technical Analysis?
Technical analysis (TA) is the study of price action and volume to predict future price movements. Unlike fundamental analysis (which looks at value), TA looks at charts.
The core belief: Price reflects all known information. Human emotions (fear, greed, hope) create predictable patterns that repeat across all markets and timeframes.
"The market is a pendulum that forever swings between unsustainable optimism and unjustified pessimism. Technical analysis helps you see where on that pendulum we are."
— Benjamin Graham (adapted)
Why TA Works Especially Well in Crypto
- 24/7 trading — No gaps, cleaner chart patterns
- High retail participation — Emotional traders create textbook patterns
- Self-fulfilling prophecy — Millions watch the same levels
- Pure price discovery — No PE ratios or earnings — just supply and demand
Contrarian Take
Everyone's worried about Meta's metaverse spending. They should be. But what they miss is that Meta's AI advertising engine is so far ahead, they can burn $10B yearly on moonshots and still dominate.
Reading Candlestick Charts
Candlesticks are the foundation of chart reading. Each candle shows four prices: Open, High, Low, Close.
Bullish Candle (Green)
Close > Open = Buyers won this period
Bearish Candle (Red)
Close < Open=Sellers won this period
Key Candlestick Patterns
Long lower wick, small body at top. Shows buyers rejected lower prices.
Long upper wick, small body at bottom. Shows sellers rejected higher prices.
Open and close nearly equal. Market undecided — wait for confirmation.
Green candle fully engulfs previous red. Strong buyer takeover.
Red candle fully engulfs previous green. Strong seller takeover.
3-candle pattern: Red → Small → Green. Dawn after the darkness.
Support & Resistance
Support is a price floor where buying pressure historically prevented further drops. Resistance is a ceiling where selling pressure prevented further rises.
Support Levels
Price bounced here before. Buyers remember this price as "cheap." Look for long lower wicks — buyers defending the level.
Resistance Levels
Price reversed here before. Sellers remember this price as "expensive." Look for long upper wicks — sellers defending the level.
Role Reversal
When support breaks, it often becomes resistance (and vice versa). This is called a "polarity flip."
Dynamic S/R
Moving averages act as dynamic support/resistance. Price often bounces off the 50 or 200 MA.
Pro Tip: Zones, Not Lines
Support and resistance are ZONES, not exact prices. Give yourself ±2-3% wiggle room. The more times a level is tested, the more significant it becomes.
Essential Indicators
RSI oscillates 0-100. Readings above 70 = overbought (may drop). Readings below 30 = oversold (may bounce).
- RSI < 30 (oversold)
- RSI bouncing off 30 line
- Bullish divergence (price lower, RSI higher)
- RSI > 70 (overbought)
- RSI rejecting from 70 line
- Bearish divergence (price higher, RSI lower)
MACD shows the relationship between two moving averages. It consists of the MACD line, Signal line, and Histogram.
- MACD crosses above Signal line
- Histogram turns positive (green bars)
- MACD crosses above zero
- MACD crosses below Signal line
- Histogram turns negative (red bars)
- MACD crosses below zero
MAs smooth out price action to show trend. Common ones: 20 MA (short-term), 50 MA (medium), 200 MA (long-term).
- Price above 200 MA = uptrend
- Golden Cross (50 MA crosses above 200 MA)
- Price bouncing off MA as support
- Price below 200 MA = downtrend
- Death Cross (50 MA crosses below 200 MA)
- Price rejecting at MA as resistance
Volume Analysis
Volume is the number of coins/tokens traded. It's the most important confirmation tool. Price moves on high volume are more meaningful.
High Volume = Strong
- Breakouts on high volume = likely real
- Trend continuation on high volume = healthy
- Reversals with volume spike = conviction
- High volume at support = strong defense
Low Volume = Weak
- Breakouts on low volume = likely fakeout
- Rally on declining volume = weakening
- Drop on low volume = temporary pullback
- Low volume = less conviction
"Volume precedes price. If you see unusual volume before a move, pay attention — smart money is positioning."
— Market Technician
Choosing Your Timeframe
Different trading styles require different timeframes. Use higher timeframes for trend, lower for entry.
| Trading Style | Primary TF | Entry TF | Hold Time |
|---|---|---|---|
| Scalping | 15m - 1H | 1m - 5m | Minutes to hours |
| Day Trading | 1H - 4H | 15m - 1H | Hours (same day) |
| Swing Trading | 4H - Daily | 1H - 4H | Days to weeks |
| Position Trading | Daily - Weekly | Daily | Weeks to months |
Multi-Timeframe Analysis
Always check at least 2 timeframes. The higher TF shows the trend — never trade against it. The lower TF shows entry points within that trend.
Classic Chart Patterns
Three peaks — middle highest. Break of neckline confirms the reversal. Target = height of pattern.
Flat top resistance, rising support. Usually breaks up. Wait for volume confirmation.
Flat bottom support, falling resistance. Usually breaks down. Wait for volume confirmation.
Price consolidates between parallel S/R. Trade the breakout direction. Often continues prior trend.
Sharp rise (pole) then consolidation (flag). Break above flag = continuation. Fast and powerful.
Two lows at same level = strong support. Break of neckline confirms. "W" shape.
Building Your TA System
Here's a simple, effective TA workflow:
- Check the trend (Higher TF) — Is daily/weekly bullish, bearish, or ranging?
- Find key S/R levels — Mark major supports and resistances
- Wait for price at level — Don't chase — wait for price to come to your level
- Look for candlestick signal — Hammer, engulfing, etc. at the level
- Confirm with indicators — RSI oversold? MACD crossing? Volume spike?
- Enter with stop loss — Stop below support (for longs), above resistance (for shorts)
- Target next S/R level — Take profits at logical levels
Technical analysis is a skill. Like any skill, it improves with practice. Start paper trading before risking real money.