Technical Analysis
Reading Charts 101
The purpose of this section of the lesson is to help Omakasea community members to use real world price data and quantitative analysis of market sentiment to predict the future value of a market or asset.
TA is essentially using data, and past data, to attempt to analyze and predict market movements of assets or indexes.
Key principles of Technical Analysis
- History repeats itself
- Price move in trends (what goes up comes down, what does down comes up!)
- the market discounts assets
- TA is a set of tools, but the value of tools will be determined by the users
All of us in crypto have lost our shirts at one time or another. Let’s learn read charts so that happens less.
Markets are psychology. It’s a physical representation of the emotional cycle of a large group of humans.
A few things to remember
- If you’re new to TA, it will take you some time to get the hang of.
- Everyone gets rekt. It’s more about learning from your mistakes and persisting.
-Quality trades over quantity. Pros take losses on 80% of their trades, but it’s the quality 20% that makes them profitable.
- Constantly checking charts (unless babysitting is part of your strategy) is usually just pushing dopeamine or cortisol, which puts a trader at risk for making emotional decisions (bad).
- Think of TA more as a tool to mitigate risk and predict potential movement opportunities, rather than a cheat code to figure out the exact upcoming price.
- TA is not the full answer, it’s just a part of the toolkit. One must use fundamental analysis of the projects and the markets they’re investing in, as well as technical analysis to predict direction.
Reading charts will not help you if you -
-put 80% of capital into a farm and not cash reward tokens
- never buy long hold assets
-never diversify based on fundamentals
- if you panic sell or fomo
- if you forget that this is crypto- there’s insolvencies, black swans, hacks, protocol failures, rugpulls, etc.
Basic Chart Skills
-identifying and planning for buying and selling opportunities for long term holds (BTC, ETH) and short term riskier moves, like reward tokens.
-Evaluating whether the market (and your market portfolio) is going to move up or down over the upcoming extended period (s).
- Monitor price movements of long term holds that lead tokens that have similar genetics- tokens forked from top cap tokens may follow their parental token. (BCH follows BTC, ETH and ETC, etc.)
- Remember that the market follows BTC.
- Recognize FUD and FOMO when you see them.
Consider buying a PokeGan NFT.
You'll gain so much more than the basic outlines here.
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