Traders can perform two different kinds of analysis; Fundamental Analysis and Technical Analysis. When performing Fundamental Analysis, you try to find out the real value of the currency by analyzing the use cases, the number of transactions, economic factors, P/E (price/earnings ratio), team, coding activity, inflationary or deflationary supply, competitors, and more.
Technical Analysis basically consists of analyzing past market data, mainly price and market volume, to forecast future patterns and directions of the price with the intent of profiting from this insight. A technical analyst applies a mix of technical indicators when studying price movements. These are mathematical calculations, based on past data of a certain asset, which gives some insight into potential price directions. This is where charts come in!
The Chart offers countless possibilities to analyze currencies, including;
- Draw support and resistance lines Support and resistance lines are one of the most commonly used tools when analyzing a chart. Support and resistance are lines traders draw on the chart, that act as barriers. Many traders expect the price to make a rebound from this level. For example, if a coin's price is falling and it reaches a support level, it is expected for the price to rebound from that level and start increasing. If the price increases and it reaches a resistance level, then it is expected for the price to rebound from the resistance and start heading lower. This however, isn't always true as otherwise, the price will be caught in a range forever. Support and resistance levels will be broken, and when these levels break, the price usually moves very fast up or down. Make sure that you save the chart in the upper right corner, otherwise, your support and resistance lines won't be saved.
With support and resistance, you determine key levels (support and resistance levels) on the chart in which the price fluctuates. Once the support or resistance level has been broken, it could result in up or downward potential. https://www.youtube.com/watch?v=g0Tp8to6BFo
Select Technical Indicators
There are 4 different types of Technical Indicators; Trend, Momentum, Volatility, and Volume Indicators. You can select multiple indicators, including moving averages and momentum indicators, and check their crossings and values on numerous time frames. You can even save templates with specific indicators to quickly check the performance of your favorite trading pairs every time you log into Cryptohopper! You only have to select another trading pair, and all the indicators will be shown.
Trend indicators boil down sporadic and varying candle prices into a single uniform line. The idea is to pinpoint and follow trends to foresee when they might reverse or range, and then base a trading decision off of that.
The vast majority of indicators that are considered trend indicators are moving averages. These are calculations that generate price averages for the last "X" periods to identify a trend line. The philosophy behind trend lines is that prices may go up and down across different candles, but if you calculate an average, you can see whether the aggregate of all candles indicates an upward trend (increase in price) or a downward trend (decline in price). With this insight, you can also figure out when an asset will reverse in trend, or when it's ranging (moving sideways) since most of these indicators lose money when the price ranges.
The most representative indicators to identify trends are the following: Moving Averages. These are divided into many different types, each of them having their own specifications. Cryptohopper has added the most used ones, these are: Simple Moving Averages (SMA), Exponential Moving Averages (EMA), Double Exponential Moving Averages (DEMA), KAMA, Mesa Adaptive Moving Average (MESA), MACD (which is considered a mix of a trend and momentum indicator), T3 Tillson Moving Average, Triangular Moving Average (TMA), TEMA, Parabolic SAR, and WMA.
The momentum measures the speed and strength of the price movement. It compares the current closing price with the one a certain amount of periods ago. Momentum indicators' levels hover between 100 and 0, or around a zero line depending on the indicator. For example, if the current level is 64 and the previous one was 60, it suggests that the price is moving upwards.
Momentum indicators on their own don't provide much information about future price movements. They mainly tell us if the price is trending up or down and if it is considered overbought or oversold based on past price ranges.
In Cryptohopper, you can find some of the most representative momentum indicators. These are: Stochastic, RSI, StochRSI which is a combination of both and is designed to enhance sensitivity of the previous ones, Ultimate Oscillator, Williams %R, Chaikin A/D Oscillator, CCI, DMI, Momentum, Money Flow Index (MFI) which can be considered as a volume indicator as well, PPO and Rate Of Change (ROC).
Volatility indicators measure the volatility of the price, indicating when a market is more volatile and, therefore, it has a higher volume. When the price is more volatile, it has fewer ranging possibilities, thereby making the price to start trending and favoring longer positions.
Traders love volatility. It moves the price creating trading opportunities and is usually accompanied by more volume. Markets with little volatility are considered boring and not profitable, as well as very possibly more illiquid.
The volume indicates the number of contracts traded for a certain asset in a period of time. These ones will help you measure the strength of a trend and its direction. Traders like volume since, similarly to volatility, it creates trading opportunities. On the other hand, they try to avoid low volume periods since the price might be ranging which may lead to either low profitable trades or negative ones.
Regarding volume indicators, the most used one is simply the market volume, it measures the number of contracts traded in a period of time. This indicator (that actually is not an indicator since it doesn't imply any calculations) is one of the most used to analyze the market. It gives a very good insight into when and where the volume appears in a market.
Volume indicators that you can find in Cryptohopper are: On Balance Volume (OBV), Chaikin A/D oscillator, and Money Flow Index (MFI).
These are the most representative group of indicators. Most of the existing indicators are included or are variants of these four groups. In Cryptohopper you can trade with up to 130+ Technical Indicators and Candle Patterns. Combine them in the strategy designer until you find the strategy that best fits your trading style!
On the left hand side of your charting page you also have a lot of drawing tools. Let's walk through them!
Cross, Dot & Arrow: The Cross, Dot, and Arrow work pretty much the same. They show you the price level on the vertical axis and the time on the horizontal axis. The only difference between the three is aesthetics.
Eraser: This pointer is different from the other three, as you can essentially delete any previously made drawings just by clicking on them. It also displays the price level on the vertical axis and the time on the horizontal axis, just like the others.
Trend Lines Section:
Trendline, Horizontal Line, Horizontal Ray, Vertical Line, Cross Line, Arrow, Ray, Extended, Parallel Channer, Disjoint Channel, Regression Trend: These are all simple drawing tools to help you draw out your analysis.
Info Line & Trend Angle: The info line displays the percentage growth or loss between two points as well as the distance (in both time and candles) and the angle of the trend. The trend angle, as the name suggests, simply provides the angle of the trend.
Anchored VWAP: This tool displays the volume-weighted average price (VWAP) for a specific period. Simply click on the drawing tool, and then on any point on the graph to have the VWAP show up, until the latest price. You can treat the VWAP as a moving average by which you can analyze whether you are in a bullish market or a bearish one. This tool is useful because you can add it to longer inter-day timeframes (which is not possible with the regular VWAP indicator).
Complex Drawing Tools
This section is comprised of more complex drawing tools such as many different Fibonacci, Gann, and Pitchfork types.
This tool section is useful when creating geographic figures. For example, you can use the rectangles to draw support and resistance levels, the triangle for the bearish and bullish triangle patterns, the circles to pinpoint breakthroughs, etc.
Text Drawing Tools:
These drawing tools can be used to write important notes on your chart. Simply click on the text button, then on the chart and write out whatever you desire.
You can use this section to draw out chart patterns such as the triangle pattern, Head and Shoulders, ABCD, etc.
This section can be used to make future projections. You can use the "Forecast" and "Projection" tools to make predictions about where the price may head in the future. You can use the "Date and Price Range" to see how long it took the price to reach a certain percentage. The "Long Position" and "Short Position" can be used to either predict the profitability of a position or to manually backtest how a strategy would have performed in the past.
Finally, you have the pictures section. Here you can insert pre-made pictures on your chart. This is generally more useful when creating content, though, and not as useful when analyzing charts.
The measuring tool can be used to identify the percentage difference between two points quickly. This tool is useful as it can be rapidly accessed, and it can tell you how much an asset rose during a specific period.
* Determine the candle size
Determine the size of the candles and check various time frames. You could use Daily or 4-hour candles to check whether the overall market is bullish, bearish, or sideways, and use the smaller candles to determine your buy and sell moments.
Below the chart, there are 3 additional tabs that show information about the trading pair selected. The first one is called Market and shows details about the last price, highest bid, lowest ask, the spread, volume, and volume in the currency selected.
The second tab shows the 5 highest bid and the 5 lowest ask orders, the amounts of orders, and the total cost. The order book changes at all times, when large orders get filled it could result in a high upward or downward potential.
The third tab shows the Technical Analysis for a specific trading pair. TradingView uses multiple indicators to determine whether there is a strong buy, strong sell, or a signal in between. Easily switch between candle sizes to determine the long and short term trend or your trading pair selected.
The next tab on top of the Chart page, Binance markets, shows all Base currencies available on the exchange selected. Below the Base currencies, you will see all currencies (trading pairs) that can be traded with those Base currencies. The currencies shown here are the same currencies that you can select in the Base config under "Coins and amounts".
All information, including Market, Last, Bid, Ask, Spread, and volume can be filtered by clicking on the arrows that go up and down.
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Market The market shows the coins that you can trade with the chosen base currencies.
Last Last shows the latest buy or sell rate the trading pair got traded for.
Bid The quotes below "Bid" show the highest rate someone is willing to buy the currency for at that moment, meaning these are the first orders to be filled when a seller places a Market order. When a Limit order has been placed, it could mean that this order won't be filled as there could be new buyers that are willing to pay more for the same currency.
Ask The quotes shown below "Ask" are the opposite of the Bid quotes, meaning that it shows the lowest rate someone is willing to sell the currency for at that moment. These are also the first orders to be filled when a buyer places a Market order. When a Limit order has been placed, it could mean that this order won't be filled as there could be new sellers that are willing to receive less for the same currency.
Spread The spread is the difference between the highest bid and lowest ask order. The spread could be especially useful to determine which currency you select for the Market Making bot. This bot type continuously places buy and sell orders, the spread between the bid and ask rate will then be your profit.
Volume Volume is another important metric that could support you in your trading decisions. The volume is shown in the Base currency, meaning that for ADA a value of 9961BTC has been traded during the last 24 hours. When there is a lot of trading volume, there is a higher chance that your limit orders will be filled as there are many smaller price movements.
Liquidity is another important metric that is linked to volume and it refers to the order sizes and rates of the buy and sell orders shown in the order book. Keep in mind that currencies that do not have a filled order book could be used for pump and dumps schemes. A pump and dump scheme comes down to suddenly buying the whole order book of currency to let the price increase significantly. When other traders get FOMO (Fear Of Missing Out) and place buy orders as well, the original buyers will then dump their coins and reap profits.
The signals tab on the chart page refers to the AI signals and scores of your AI Strategy Designer.
Market The first thing you see are the specific markets that the AI is sending signals to. You will not see any coins here that you have not selected in your baseconfig. For example if you have selected BTC, ETH, XRP and LINK in your baseconfig, you will only see those 4 coins here, when the AI will be signaling either a buy or a sell.
AI Shows the name of your AI Strategy. Clicking on this will get you to the AI section, where you can edit your AI.
Trend The Trend shows you in what trend the market is right now according to your AI Strategy. In the example above, you can see that it is in an uptrend.
Price The price shows the actual price of the coin(s) at the moment.
Signal Normal scores are between -1 (for sell) and 1 (for buy), these values will determine whether you will see a buy or sell signal under "Signal". For everything under a -0.3 it will be a sell, and for anything over a 0.3 it will be a buy. If you use corrected scores, then buy signals start at 65% and above, and sell signals start at 35% and below.
Score The score basically shows the underlying value for the signal shown as explained under Signal, right above. This shows the "normal score" and NOT the corrected score.
Corrected signal Normal scores are between -1 (for sell) and 1 (for buy), corrected score is a value between 0% and 100% . The corrected score improves over time (as it uses the real time data and continues to learn). In the Base Config, you can determine whether you would like to use the regular Signal or the Corrected signal. Corrected score will therefore also change the signal in some cases, for example from a "sell" to a "strong sell".
Corrected score(displayed as "Score %") The Corrected score shows the underlying value of the Corrected signal explained above.
Lowest Under lowest, you can find the lowest "normal" scores found for the respective signal.
Highest Under lowest, you can find the highest "normal" scores found for the respective signal.
Signals Signal shows the number of signals given. This number is the same as the number of all of your signals strategies. As all strategies will signal: buy, sell or neutral.
View By clicking on View you can view all of the information discussed in a compressed manner. The only additional information is the date and time when the signal has been sent. Additionally if you click on signals, you can see which of your strategies is sending a signal.