Technical Analysis

Technical analysis

Technical analysis is the study of the price movement and patterns of a security. By scrutinizing a security’s past price action, primarily through charts and indicators, traders can forecast future price direction.” ~ Investopedia



DISCLAIMER: Content within this thread is intended for educational purposes only, and purely a result of personal research and experience of individuals that are not registered or licensed brokers. Methodologies and techniques presented within the entirety of this thread are subject to inaccuracy variability of result. It is advised that you do your own research and verify any information and/or assertions your find in this thread with a professional financial adviser. Past performance is not indicative of future results, the following material hereafter is not any substitute for professional advice. All authors of any material within this thread bare no liability whatsoever for any loss or damage you may incur.


Below you will find various resources, methods, and techniques you can use to improve your technical analysis skills. From beginner to advanced, you will find something of value that will help give you confidence in approaching your trading.

Trader Type

One of the first things you want to do is identify what type of trader you are - your available time, personality traits, and overall goals will tend to determine this. There is three general types; Day Traders, Swing Traders, and Position Traders/Investors.

Day Traders are in and out of trades each day, typically not exposed overnight to any risk. The typical day trader is looking for anywhere between 5-20+ trades in a single day. Due to the higher volume of trades per day, the approach with methods and analysis differs, and also the chart timeframes to work on. For example, it’s not reasonable to be attempting Wykoff analysis for day traders, or watching chart timeframes higher than 1 hour. Typically day traders are very ‘indicator dependent’ (bollinger bands, stochastics, rsi, volume), and work on 1, 5 and 15 minute charts.

Swing Traders are those who are holding exposure anywhere from overnight to a few weeks or more. Here is where you can put more time into analysis with an emphasis on trend following, pullback trading, and breakout trading. To do this well requires an much more investment in your knowledge base - which is required to leverage the key thing called ‘confluence’. Overall, swing traders start to consider more news and events around a market, with a greater emphasis on technical analysis. Typical timeframes to work on are 4 hour chart and Daily, with some consideration for weekly chart, and 1 hour chart for closer entry/exits.

Position Traders are much more focused on the asset fundamentals, news/events, and larger market cycles. Typically holding a position for several months or years, and simply managing it through a DCA method with scaling in and out. If you here someone talk about their ‘average price’ - it’s likely they’re a position trader, as opposed to swing/day traders who reference a entry/exit price. Position traders are typically watching the Weekly and Monthly charts, with consideration to the Daily chart. There is less emphasis here on Technical Analysis - ‘moving averages’ can suffice. Instead the focus is more around evaluating the company, usecase/market potential, macro trends, and broader sentiment/narrative.



You may find that you do a bit of all three types - which is fine, but overtime you will not be as proficient at any type compared to someone who focuses specifically on one. The typical pathway people take is starting as a day trader and getting a feel for basic TA methods with more readily feedback occurring. Unfortunately, leverage trading is also geared to this trader type which novice traders get attracted to and go bust from their lack of experience and risk management. However if you can avoid such an early pitfall, chances are you may progress to a swing trader - learning more advanced methods and refining speculation on fundamentals, news, events ect. It’s not always, but the next step after is becoming a position trader, or a kind of blend between swing and position. Essentially, with more success, knowledge, and experience, you will find that less time is needed to maintain and manage your trading/investment.

In the next post, I will start to introduce various methods and trade setups that I have refined over many years. Of course, TA is a skill and many enjoy the process of exploring their own approach to it, but if you want a shortcut to utilizing something that works very well with a high degree of probability, then I am happy to share what I know.


DISCLAIMER: Content within this thread is intended for educational purposes only, and purely a result of personal research and experience of individuals that are not registered or licensed brokers. Methodologies and techniques presented within the entirety of this thread are subject to inaccuracy and variability of result. It is advised that you do your own research and verify any information and/or assertions your find in this thread with a professional financial adviser. Past performance is not indicative of future results, the following material hereafter is not any substitute for professional advice. All authors of any material within this thread bare no liability whatsoever for any loss or damage you may incur.

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First Steps

One of the most common disagreements with traders is also quite basic - are we in a bullish trend or bearish trend? As obvious as it might seem, seldom is the response “what timeframe are you on”. Secondly, the market may not be in either a bullish trend or bearish trend - you need to identify when it is ‘ranging’ as well. Another term for ranging can be ‘accumulation/distribution’ or consolidation. But such things don’t always happen with a range, but they often do.


Now people have different criteria for how they determine a trend, but I will give you mine. So first, I’m going to show my ‘all-rounder’ chart/indicators which I use, and with it we can easily identify the trend direction and ranges.

The two red arrows point to;
200 ema (Black Line)
20 ema (Blue Line)

The 200 ema is what I use as a basic trend filter. If price is above it, I would look for ‘long’ entries. If price is below it, I would look for ‘short’ entries. The blue line (20 ema) is very close to the ‘midline’ of a bollinger band (20 sma), and this 20 ema is used for tighter entry/exit of individual ‘trend legs’.

Both these ema’s are often used as well for what is called ‘dynamic S/R’ (support/resistance), but we will get to various S/R types later on. Using the 200ema and 20ema is a quick, easy, and reliable way to identify the market phase. Once you know what phase the market is in (trend up/down or ranging), you then apply the appropriate strategy to this.

It is no use trying to apply trend following methods in a range, or a ‘bollinger bounce’ during a trend. The market state also changes how to weight indicators. As many indicators are based relative to their ‘lookback’ period, observing a breakout of range is something to consider when evaluating what indicators are displaying. Not always does ‘overbought’ mean ‘overbought’ - consider what the indicators have included as a relative reference prior to it. More on this later too.


The first step you should be doing is starting on wider timeframes (relative to the trader type you are). Simply take note of the market state - is it trending, or ranging? You can tell if it is ranging if price is constantly crossing the 20 ema and 200 ema on a more wider swing. After this, work your way down to lower timeframes and take note of the market state. What you're trying to identify here is the most basic kind of 'confluence' there is - timeframe confluence of market state. If the Daily chart, 4 hour, and 1 hour chart are all in a bullish trend (above 200 ema and 20 ema), then there is a greater chance that you can make a successful 'long' trade on the 1 hour chart. But there is many things you should still consider first.

Risk management. Where to put a stoploss, where to put a target - there is a million answers to this. As a simple rule of thumb, your reward should be at least 1.5 - 2x greater than your risk. This means the distance to target compared to distance to stoploss. This R/R (risk/reward) ratio is something that you will improve significantly as we get into more advanced methods.

One Simple Method

For now, let me show you a very simple yet effective setup that you can use right now with minimal understanding.


For this we are going to use the 'MACD' indicator, and the 200 ema. If you understand divergences, this is a great addition to supplement for higher probability.

In the above image we can see the criteria met for this method to take a short position. What we are looking for is such;

  1. Price under the 200 ema
  2. MACD line and Signal line is above the Horizontal
  3. MACD line (white line) has crossed below the Signal line

Here you can put the stop loss just above the 200 ema, and aim for a 2x R/R ratio. Or better yet, use the 20 ema as an exit criteria. like such;

This example has a Risk/Reward ratio of 7.2x - so by using the 20 ema as an exit criteria you capture a much larger swing.

This method has been tested extensively by many traders and has an approximately 75-80% probability of success. And as a small caveat, on tradingview you can use the signal finder tab to filter markets for these exact conditions (or inverse conditions for long trades). Here is the details for that;

For Longs


For Shorts


In the next post I will cover using divergence to help identify larger price swings, and two powerful trend following strategies to help identify when to stay in and when to get out.

DISCLAIMER: Content within this thread is intended for educational purposes only, and purely a result of personal research and experience of individuals that are not registered or licensed brokers. Methodologies and techniques presented within the entirety of this thread are subject to inaccuracy and variability of result. It is advised that you do your own research and verify any information and/or assertions your find in this thread with a professional financial adviser. Past performance is not indicative of future results, the following material hereafter is not any substitute for professional advice. All authors of any material within this thread bare no liability whatsoever for any loss or damage you may incur.

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Chart Setup

In this section I’m going to cover the indicators and chart setup I use specifically for Crypto Markets. Will be using TradingView as it has an extensive library of tools and indicators.

Open your market chart, near the top you will find an indicator search icon. For our first indicator input the following;

“ICHIEMA BB”

This indicator combines Ichimoku system, moving averages, and bollinger bands all in one. Next we want to change the default settings to something more optimal.

Click the settings icon next to the indicator in the top left of screen, then we want to adjust the moving averages to 10, 20, 50, 100, 200. Personally I only use the 200 as I prefer less clutter on the screen, but you can use any of these common moving average lengths as ‘dynamic support and resistance’ lines.

Next we want to adjust the Ichimoku settings - as the default settings are suited to a traditional market, not 24/7 crypto markets. You can read more about this here > My Top 3 Favourite Indicators for Technical Analysis of Cryptocurrencies | Hacker Noon

We want to change this to 20, 60, 120, 30, as shown in the image above. Personally I only tick to show the Kinjun line and Cloud - again, to reduce clutter and highlight the more significant parts of the tool that price tends to respond more consistently too.

A study was done with over 100,000 backtesting of individual indicators for their reliability - these ranged from DMI’s, StochRSI, MACD, Bollinger Bands, RSI, CCI, A/D, and many others. What was found that most were a coinflip, with the exception of Bollinger Bands, RSI, and MACD if used correctly. In addition, you don’t want several indicators that are all measuring the same thing - i.e. Momentum. You want a combination of Volatility, Volume, and Momentum otherwise you run the risk of confirming weak confluence as something with higher probability when it’s not. I see this all the time - people using 5-6 momentum indicators and when they all line up they think they have something special. The reality is, they will generally always do this as they run of very similar formulas/calculations. Lets move on…

What we want to add next is the RSI, MACD, and Stochastic. Important to note, a ‘Stochastic’ is not the same as the ‘StochRSI’. A Stochastic is calculating off the last price data of the default 14 period lookback, a ‘StochRSI’ is calculating off the last value of the RSI itself over the default 14 period lookback. The lookback period is simply the number of bars/ticks on any given timeframe that you are viewing. So a 14-period lookback is considering the last 14 bars. This is why shortening the lookback period results in a more responsive but ‘noisy’ indicator, and a longer lookback period smooths out the noise with a wider data reference to average out. This is important to understand when price moves from a long flat range into a breakout trend.

So we have our Ichimoku system setup correctly, our bollinger bands, and EMA’s, RSI, MACD, and Stochastic. If you need to drop one to keep in the free-version limit of trading view, I would remove the stochastic first. After you have all these, you can play around with the visual color themes and gradients if you wish, but lets get into how to use it all.

The RSI (Relative Strength Indicator)

Here is the first mistake most traders are taught to do - the RSI is not best used for “Overbought” and “Oversold”. That’s right, it is almost useless for this purpose with a 50-50 probability of being wrong/right. So what do you use it for?

Divergence! - RSI Divergence is an incredibly powerful way to spot price pivots - and the great this is it can do it with good warning ahead of major swings. Often found at tops and bottoms, and will immediately improve any traders success by learning this one simple thing. If I was only allowed to have 1 indicator on a chart - it would be the RSI, and I would be using it for spotting RSI divergence. Now the trouble people have is basically learning how to plot it, it takes some practice - but here is a cheat sheet;

Regular Divergence is the ‘strongest’ and with high probability it often results in a price pivot. Hidden divergence and Exaggerated divergence is significantly weaker, but still worth paying attention to. This is what you really use and RSI for, and also a Stochastic. You can even apply it to MACD/Signal lines but I don’t recommend that. What we want to use here is the best of the best, and filter out methods that may be good but not great. Lets find two examples of both bearish and bullish RSI divergence.


Bearish RSI Divergence

Just recently we can see on BTC Daily chart that we formed a higher high with price, and a lower high with the RSI. What followed was a sell off back to the Kinjun line and ichimoku cloud.


Bullish RSI Divergence

The middle example here at the BTC dip is Bullish divergence, but I thought I would add in a few more examples where price action is literally pivoting at both Bearish and Bullish divergence. Once you get the hang of it, you will spot them all over the place. An important rule here is to wait for the RSI to close with a slight pivot to confirm, otherwise price can continue in the direction and invalidate what would of otherwise been a divergence pivot.

So do you use RSI at all of ‘Overbought’ and ‘Oversold’? Well yes, but the key question you need to ask is what came before it? Is price breaking out of a range, or has it been in a matured trend? Remember the RSI is ‘Relative’ to the 14 bars before it. So when it is breaking out of a range and signaling as ‘Overbought’, this should be ignored and instead considered as a ‘Sign of Strength’. Yet on a mature trend, the RSI has had time to adjust to the trend movement, and this is where you would start to consider overbought/oversold as more reliable - especially if divergence is also present.

Here is an example of this;

The RSI is giving a false-positive due to the relative range prior to the breakout of that range. Price continued, so this is where you should ignore it - when price breaks out of a prior range, read it as a sign of strength, not the opposite.


As this has been a rather lengthy post already, I’ll leave at this and pick up on the next post with Bollinger bands and Ichimoku system.

DISCLAIMER: Content within this thread is intended for educational purposes only, and purely a result of personal research and experience of individuals that are not registered or licensed brokers. Methodologies and techniques presented within the entirety of this thread are subject to inaccuracy and variability of result. It is advised that you do your own research and verify any information and/or assertions your find in this thread with a professional financial adviser. Past performance is not indicative of future results, the following material hereafter is not any substitute for professional advice. All authors of any material within this thread bare no liability whatsoever for any loss or damage you may incur.

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