If the volume decreases, the price is moving against the trend.Ħ. If the price movement is accompanied by an increase in volume, it means the price moves in the trends direction. In terms of the cryptocurrency market, this principle can be seen in the correlation between cryptocurrency pairs movements.ĥ. Signals on one index must confirm the signals of another. Experienced traders start to distribute their holdings during rampant speculation.Ĥ. As more traders begin to notice a new trend and follow it, the price starts to change rapidly. Because there are so few of them, the price does not change much. At this stage, experienced traders begin to buy or sell an asset. Any primary trend has three consecutive phases: There are three phases of primary trends. Finally, there are short or minor trends that last less than one or two weeks.ģ. Within primary trends, there are secondary trends, which are often corrections to primary trends and usually last several weeks. There are primary or main trends that last from several months to more than a year. Price movement is not chaotic it moves in trends. According to this idea, the price of an asset already incorporates all information about this asset, including market sentiment and traders expectations.Ģ. This theory consists of six fundamental ideas.ġ. Technical analysis is based on the Dow Theory, named after its originator Charles Dow. Instead, it relies on the history of the assets price movements. Unlike fundamental analysis, technical analysis does not try to determine an assets true price.
Technical analysis is a method to determine how and when to trade an asset and to predict its possible price movements through the study of past market data.
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