Trading guide for cryptocurrency: 8 simple technical analysis strategies | Price Trend and Resistance Level

This article, the third in our investing and trading series, focuses on short-term crypto investing using basic technical analysis. We’ll cover simple strategies that involve identifying price trends and resistance levels. Keep in mind that while technical analysis can seem clear after the fact, it often gives false signals. To improve accuracy, confirm each signal with multiple indicators and other types of analysis.

1. Key concepts

Price Trends: A price trend is the general direction in which the price of an asset is moving over a certain period. Trends can be upward (bullish), downward (bearish), or sideways (neutral). Identifying trends helps traders make decisions about buying or selling.

• Uptrend: Prices are generally increasing, with higher highs and higher lows.
• Downtrend: Prices are generally decreasing, signaled by lower highs and lower lows.
• Sideways Trend: Prices move within a limited range, showing little upward or downward momentum.

Resistance Level: A resistance level is a price point where an asset struggles to break through, causing the price to stall or reverse downward. Traders often use resistance levels to identify potential selling points or to set stop-loss orders.

2. Momentum trading tactic/trend-following tactics

Momentum trading is a simple tactic based on the following cryptocurrency price trend. You buy at the beginning of an upward trend, then sell at the end.