Technical & Fundamental Analysis

Updated: Feb 8

There are a lot of methods an investor can do to research a Cryptocurrency that they are interested in. With so much information out there it can be difficult for less experienced investors to sort through, pick out and analyse the useful information that could determine whether a Cryptocurrency may go up or down in value. Two of the most common types of analysis used by traders are fundamental analysis and technical analysis. How they are used varies from trader to trader but when used correctly they can accelerate an investors growth and understanding of the markets tremendously.

Technical Analysis

Technical analysis is a form of analysis in which an investor will analyse historical price action (Where price has been previously) and patterns using charts to forecast where price may possibly go in the future. The general belief amongst technical traders is that price action displays all the information there is to know about a cryptocurrency. By analysing price you can get a sense of how the market views an asset. Is it going up in value? Is it going down in value? Has it reached a significant price that often results in a big sell off? These are all questions that a technical trader may ask themselves. Many technical traders use tools such as trend lines and Fibonacci levels to help them to determine the outlook of a cryptocurrency. We will touch on technical analysis tools and indicators in a later article.

Fundamental Analysis

Fundamental analysis is based on a Cryptocurrencies “fundamentals” and involves an investor looking through information provided about a cryptocurrency that can be found in whitepapers, news articles, social media etc. An investor might look at things like tokenomics (the economics of a token)...

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