As crypto currencies are quite volatile, traders decide to bet on long or short positions. In a long position you bet that the price will rise, while in a short position you bet that the price will fall. The risk here is immense, because as soon as the price moves into the opposite position, the entire deposit is lost from a certain leverage. On the Bitmex* trading platform you can set long and short positions.
The fundamental analysis can also be described with an analysis of causes in which an attempt is made to analyse the reasons for the fluctuating prices. One tries – transferred to the crypto currency market – to evaluate the infrastructure and the economic environment and thus to determine the actual value of the crypto currency.
The Technical Analysis – Terms & Methods explained
In the technical analysis, the price trend from the past is analyzed in order to forecast the future value. We want to present some of the most important indicators and instruments used in technical analysis.
Support / Assistance with Bitcoin Trader
Probably the best known techniques for technical analysis are the terms support and resistance. Support means nothing else than a kind of support line. In this line it is assumed that there will be a strong purchasing power, i.e. that the demand is greater than the supply and the price will rise, since many buyers are willing to buy the respective crypto currency at this price. As soon as the price approaches a support zone, the support is tested. However, if the line is broken, this can be an indicator of a downward trend.
Resistance / Resistance
In the case of resistance it is the other way around. Here the sellers rule, because they want to sell at a certain price. Supply is greater than demand and a price increase will reverse. But if the resistance line is broken, this can be an indicator of an upward trend, as purchasing power is stronger than selling pressure.
Bitcoin Chart from TradingView
SMA – Simple Moving Average
The Simple Moving Average, SMA for short, is the simple moving average. The moving average is a trend sequence indicator that follows rather than leads due to its reference to the past. The shorter the time period for an SMA is selected, the more sensitive the moving average reacts, the less sensitive the long-term average. As you can see in the figure, we have a 100 SMA, i.e. a 100-day moving average. As soon as a closing price rises above the moving average, this is a buy-signal and a sell-signal when closing below it.