UAE - How to make money with crypto using these simple technical tools

(MENAFN- Khaleej Times)

Published: Mon 24 Jan 2022, 11:25 AM

Last updated: Mon 24 Jan 2022, 11:32 AM

Volatility in cryptocurrency markets is often connected to news stories. A good example of this is Elon Musk's recent announcement that Tesla would accept the meme token Shiba Inu as payment. Following the news, the price of SHIB tokens increased, only to come down later. When social sentiments rule, it becomes difficult for some of us to keep up with crypto markets. But with the help of simple tools, you can analyze market conditions to understand good buying or selling opportunities.

So let's begin with the most important tool - charts.

Crypto markets are best represented using candlestick charts. These candlesticks are usually green (bullish) or red (bearish) color. A candlestick comprises of :

• Upper Wick : Shows the Open price or the price at which the asset starts.
• Lower Wick : Represents the close price - or the price at which the crypto closes.
• Body: The middle region that links the open price (O) and close price (C).

Support and resistance are another simple yet important set of indicators. These zones show the price at which most people are buying or selling crypto.

Support is where the price of a crypto is consolidated and will typically not fall below this range. However, if this support breaks or when the crypto's price further reduces, most traders plot the next support line that determines a new buying opportunity. This is also where 'Stop Losses' come in. As the name suggests, stop losses help traders avoid large losses by automatically selling the crypto at a predetermined support price.

Resistance zones perform in a similar way. This is the region where the price of a crypto has reached its all-time high and has been 'rejected' or it hasn't increased more than this price. Plotting a resistance zone on a chart indicates a good price to sell the crypto.

I have connected the lowest and highest prices in the chart below between April to November 2021. This shows that the $42,000 range is a strong support for bitcoin, or an 'entry price' to buy bitcoin now. Bitcoin is facing strong resistance at the $60,000 range - a good selling or exit opportunity, for bitcoin investors.

Image Source: Trading View

As you can see, support and resistance zones offer new entry and exit positions for crypto traders who may have missed previous all-time highs or price drops.

These tools are mere guides and nothing is set in stone. Sometimes, strategies of even the most experienced traders might backfire under external influences. However, TA helps minimize losses, and gives at least a temporary forecast of where the crypto market is heading, and how long one can HODL an asset.

To learn more about cryptocurrencies, visit BitOasis , the safest and easiest place to buy and sell crypto since 2015.

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