Technical analysis is a trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends derived from trading activity, such as price movement and volume. Unlike fundamental analysts, who attempt to assess the intrinsic value of a stock, technical analysts focus on price trends, trading signals and various other analytical charting tools to assess the strength or weakness of a stock.
Technical analysis can be used on any stock or cryptocurrency with historical trading data. Technical analysis as we know it today was first introduced by Charles Dow and the Dow Theory in the late 1800s.
Today, technical analysis has evolved to include hundreds of models and signals developed over years of research. The main obstacle to the legitimacy of technical analysis is the economic principle of the efficient market hypothesis. If market prices already reflect all current and past information, then there is no way to take advantage of price trends or errors to make additional profits. Economists and fundamental analysts who believe in efficient markets do not believe that historical price and volume data contain actionable information and, furthermore, that history does not repeat itself; rather, prices move like a random walk.
To perform technical analysis on cryptocurrencies, it is possible to use TradingView, Coinigy or CryptoWatch. When you start making advanced models, trading tools are often not free.
