Forex or stock market traders are familiar with the terms Fundamental and Technical analysis.
Before venturing into the crypto world you should ask yourself? Am I a Fundamental analysis trader? Maybe I am a Technical Analysis Trader? Or both.
The following will give a clear direction in understanding what type of trader are you.
So what is fundamental analysis?
Fundamental Analysis is a news-related event. For example, a new crypto partnership, a coin is listed on a major exchange. Basically, any news that has the power to move the market.
After the news was made public
(Graph from Coinmarketcap) As you can see, the trading volume has increased, the price went up by over 30% and also the market cap breached the 3 billion dollar market cap.
One of the fastest ways to follow the news this day is by following your favourite coin via a social media platform such as Facebook or Twitter.
If you are a Technical analysis person you need to learn about RSI, Moving Average, Fibonacci and other technical tools in order to predict the market.
The concept of Technical analysis is understanding the support line and the resistance line.
On the graph below will look at try to understand the support price and the resistance price.
(Graph from Cryptowatch )
If we look at the graph closely, we can see that there is an order of 88486 OMG units at the price of $8 and the second support is at $7.5 with 126845 OMG units order at the price of $7.5.
If you look at the sell order (resistance price) we will see that true resistance price is at $9 with 196928 OMG units.
Resistance price can be broken when the units are lower from the support price.
If we look at $8.5, we can see 6919 OMG sell units only.
Due to the fact the cryptocurrencies are very volatile, resistance and support line can easily be changed even every few hours.
A Technical person only relies on such a graph in order to try and ignore the media-related news.
Others believe that only by combining technical analysis and fundamental you can really be successful in trading.