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A journey into the world of a technically orientated cryptocurrency Trader.

Written by Bybit Analyst Dhiresh Manji Dabasia

The world of blockchain and cryptocurrency is something which is spoken about and known by so many people from so many different backgrounds; be it your average office worker, teacher, babysitter, builder, and even students. These are the people who may dabble in the crypto markets putting money into coins which their friends have suggested or just taking a blind punt. However, there is much more to crypto than meets the eye when investing such as looking at market caps, coin circulating supply and believe it or not most cryptocurrency adheres to and follows technical charting rules and are quite technically pure. This article will discuss a few of the technical aspects of cryptocurrency trading.

When looking at charting a crypto pair, for example, BTCUSD on trading view it is important to always to keep your charts clean, simple and easy for you to understand yourself, there is no need for lots of indicators, as this will just clog up your charts and cloud your judgment, making things very confusing. Just like the FX market, it is important to focus purely on price action and understand how and why certain things move in certain directions.

I will take you through a few steps I take initially when starting out to chart a crypto chart, from drawing my daily levels all the way to adding certain things on my charts that will give me more confluences.

1. Establishing the market trend

It is extremely important to establish the direction of the market before setting out plans to take trades.

2. Drawing accurate support/resistance levels

A technical trader will almost always have support and resistance levels on his charts, however, these days support and resistance can be dynamic in the sense that it is not always horizontal. On the other hand, it is still extremely important to start out by plotting simple horizontal levels, which are not just horizontal lines, they should be pockets which I show by rectangular boxes in blue, as shown below.

I start out by using the horizontal line tool to mark my significant levels followed by drawing a rectangular box around each horizontal as levels are expected in zones rather than one particular price point. So at this point, I would monitor price when it is approaching or is at any of these blue zones.

3. Chart patterns

Next, it is vital to spot out any chart patterns that you may see. To the average trader who has no technical background, this would be difficult at first however with practice and chart time it should become easier to spot certain patterns.

Above we see BTCUSD is trading within a falling wedge pattern which we fell from after a 3rd touch of the upper trendline. We should now expect a move to the lower trendline.

4. Fibonacci plays

Next, I would use the most recent highs/lows to establish targets and retracement areas for any trades I wish to take. For me, the 38.2%, 50% and 61.8% are the most important and reactive Fibonacci retracement levels and I usually monitor price when these levels are hit. As you can see above, BTCUSD fell sharply from the 61.8% level which was also a strong horizontal zone. This is called confluence collecting, as we are building a trade and getting more confirmations for our bias. As targets, I use the -27.2% and -61.8% extension of the Fibonacci tool.

5. Ichimoku cloud

Finally, I add the Ichimoku cloud without all of the moving averages to act as an extra confluence of dynamic support and resistance areas. Again it can be seen from the recent drop, that the Ichimoku cloud acted as resistance as well as the 61.8% Fibonacci retracement level and the horizontal significant level zone shown in blue.

These are the initial steps I take when starting to technically analyse any crypto pair. In the next article I will discuss how I look for entries and how I determine targets for cryptos both long term and short term.

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Bybit is a cryptocurrency trading platform that provides a fairer, faster, and more human trading environment. With a matching engine 10x the industry speed, 24/7 multilingual CS, and an advanced order system. www.bybit.com

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