Bitcoin Forum

I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.

This is somewhat of a problem in traditional assets, but it is just a minor nuisance. The fundamental values of traditional assets always strike back, no matter what TA says. Found resistance? Doesn't matter if the underlying value shoots way up due to increasing sales, usage or whatever. Glad a value has some support? Doesn't matter if sales drop to near-zero, the price does not care about support.

At cryptocurrencies, however, those fundamental values don't work as there are rarely any. Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.

In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.

What is your view on this?

Yes, sometimes Technical Analysis doesn't work on crypto because news and manipulation always do something about the price of crypto.

It seems that your complaint is more about speculation causing volatility than against TA itself. I agree that speculation and volatility are problems, but I take a long term view. I use Bitcoin now as much as I can, regardless of the price, and I will continue to do so in the future. All of these price fluctuations are ultimately just minor bumps in the road in the face of a long term adoption juggernaut. I am not concerned.

BTW, I agree. TA is nothing more than astrology for traders.

Speculation overall seems to be affecting cryptocurrencies if the general goal is to use them as an effective currency, since volatility will always be present with or without TA methods as long as even the slightest speculative techniques are applied in crypto to profit. It doesn't hurt the cryptos in any way but rather, help them gain exposure and traction for whatever purpose they may be best at. As a currency though, I don't see any crypto that can be as excellent as fiat in retaining its value and minimizing volatility in price. All cryptos are subject to TA and speculation, so yeah, rant all we want but we can't remove that fact from all cryptos around.

absolutely right because there are so many news that can change crypto like the price, so most of the bad news that comes in, the faster the market will decrease

Me too, and I've said as much in other threads as well.  TA has always struck me as some kind of financial voodoo science, with people staring at past prices and trying to predict the future.  All the weird terminology TA people use doesn't help, either.  Some of it is just straight-up bizarre.

As far as TA's effect on the market, I don't think there really is any.  Speculation is speculation, and it doesn't matter if speculators are analyzing charts or not.  It's the combined buying and selling of everyone in the market that moves prices.

I would agree with this if you were talking about the stock market, where the businesses underlying the stocks actually have a fundamental value that can be analyzed.  The problem in crypto is that there's no way to tell what the "fundamental value" is for any given coin.  Coins have no earnings, they don't pay dividends, and ultimately there's no business behind any of them that lends itself to traditional FA. 

It's actually not surprising that we see so many TA folks around here, because there's not much else to do besides look at charts--but I'm still of the opinion that doing so is basically useless.

Well, it seems TAs are not working even anymore. Even CZ, binance CEO saud it after thia recent usdt FUD pump. He said months of good news and insights into the cryptospace couldn't trigger an uptrend and just a alse news triggered it. Seems market is moving away from predictions and we can all testify to that because this year, many predictions never worked. Some analysts even ended up reducing the target prices.

When people publish a thread with their TA, people usually respond with positive messages like 'great information', 'useful analysis' etc. People do believe in it and that surely can lead to it becoming our reality, since traders and investors act accordingly. If it is so, however, it makes TA useful for traders, just like bad news on respected news portals mean that a trader should sell the coins rightaway. Not because the news is really important and terrible, but because people will think that others will start panic selling and start it themselves, thus causing negative price predictions to become true. It could certainly help the market if more people made positively oriented TA and people believed in it, thus making it closer to us, even if the methods themselves are useless.

you've contradicted yourself. you say there's no proof that it works, then you assert that it works because it's a self-fulfilling prophecy. which one is it?


there are also fundamentals underlying cryptocurrency that affect supply and demand to the spot market. if there's an existential protocol flaw or a significant network split, don't you think "support" might be broken too?


just because a market is speculative doesn't mean TA reigns supreme. what evidence do you have that TA is responsible for anything at all? this is a common assumption with no basis in fact.

traders (some of whom employ TA, some of whom employ FA, and some of whom are just randomly trading) are just supplying liquidity to the market. if anything, they make it less volatile (by adding liquidity) and therefore less speculative.

You're absolutely spot on this one. Even a TA expert I respect so much once told me there are times TA don't work in crypto, and I've seen it happen several times, especially for low priced coins. For me, I believe the fundamentals (news, updates, partnerships, etc.) play a major role in crypto and determines to a very large extent the price movements of individual crypto assets.

Yeah , sometimes I also wonder how can people predict the movement using the chart, and I come to the conclusion that it actually a psychology of how people will react when they analyse the chart,if a bunch of people stop believe in the chart then TA won't be useful, that is why chart sometimes could be deceiving

Thank you for your reply, really appreciate that stance!
Regarding your first point: I don't think I have contradicted myself, I may just not have sufficiently explained what I mean: There is no scientific proof, that the underlying principles of TA work for any other reason than the widespread belief that it works, meaning that it is a self-fulfilling prophecy and similar patterns would not form if they were not believed in by a large group of people, making them completely independent of the underlying economics.


I absolutely think so. However, those fundamentals are time discrete. I cannot decide to do an analysis of the fundamentals right now, I can just analyze news coming out. That's opposed to traditional markets, where I can analyze fundamentals at any given time. i'm not saying this is bad, but it definitely powers volatility and TA.



I have no evidence, hence the question in the thread title. For me, it is a question that I am asking myself and would like to get opinions - such as yours - on.
Regarding your last point I just wanted to throw in, that this exact same argument was the favorite argument of High Frequency Traders in traditional markets:
"We are not damaging the market, we are just supplying liquidity".
Turns out that was not the entire truth.

It seems that in the encryption market, graphical analysis is of no use to the market, can not play a reference role, those experts analyze a lot, but sometimes inconsistent with the market, so still rely on their own judgment, do not be misled by others.

Exactly. I like your point about TA being a self fulfilling prophecy, because that's exactly what it is.

It's almost like a pump and dump group. When people think that a prediction is going to right, they are going to buy into it. And the larger the platform that some analysts have, the more likely their predictions they make will

I'd say that anything that is out of the scope of the long term pricing trend is quite irrelevant for bitcoin. There are going to be different market conditions in the very short run that are just completely random and unpredictable, and there are people trying to use TA to cover that. Is it negatively affecting traders, especially inexperienced ones that are blindly believing in it.

Yes, using technical analysis is like knowing what other people are thinking. It is indeed a self-fulfilling prophecy wherein when the group of people thinks that it will have a support or resistance in that level then it would come true because many of them believe so. After all, technical analysis is studying the previous behavior of the market hoping that it would be the same way in the future. If not, then we have those stop losses to lessen our risks of having bigger losses.

Technical analysis helps traders predict trends. of course traders will buy in support area and sell it in resistance area. and i think of course traders will act according to trends and news that occur

What about long term TA? I know traders who only trade on the weekly or monthly time frame, to cut out the short term noise. For instance, bitcoiners who buy the dip based on the "long term trend" are employing TA.

In this volatile cryoto market the technical analysis does work like astrology and nothing more. However, this is not the thing that is stopping crypt from being a usable and reliable method for everyday transaction use. In fact there is hardly any relation between these TAs and crypto's use in the daily transactions.

yes, FUD will make other people anxious and make them participate in the sell panic trend. of course that is negative for crypto.

If people stop doing technical analysis then this strategy will no more as you said but we don't have any method to predict the prices of the crypto currencies so people comparing it with the old patterns and it also act same like that some times and the average growth of the cryptos are also following their path so it has negative effect in short term but in long term investment it can be really helpful.

Crypto currencies are good when the market is over all good and if any bad news spread in the market then it also badly effect crypto and if we analyze things technically that would be a better option but still if the market have not potential if you work hard nothing you will get in return.

The problem come in when technical analysis based on traditional asset markets are used on Crypto currency markets. I think Bitcoin being both a currency and a commodity, complicates things a little and this makes traditional technical analysis unreliable. Most of the TA is done by people who are personally invested in the asset and this makes them unbiased. <Projecting only data that will suit their hidden portfolio>  :P 

The people doing this, is just trying to manipulate the market in their favour.  >:(

 yes, sometimes market is moveble you cannot expect what happened in the next one hour, minutes, and second you must be prepared to what happened in the next, because crypto currency market is very volability. you cannot trust everytime in technical analysis theory.

There can't be scientific proof. Economics and markets can't be studied using the scientific method because cases can't be isolated and reproduced. There are far too many variables in play.

The best one can do is try to isolate trading setups and reproduce them, and then statistically backtest. My trading improved a lot when I stopped trying to use TA to make predictions. It's useful for signalling when the market has left equilibrium, and therefore when to react and what side of the market to be on.


I think the fundamentals are simply harder to read. The lack of hard numbers doesn't mean the fundamentals don't exist, but they are abstract and speculative and don't boil down to simple ROI calculations.

I find, in all markets, that the more market depth there is, the more applicable TA is. Really thin, low-volume markets (like small-cap altcoins) can be pushed around easily by news events and speculation about fundamentals.

I agree that speculation and volatility are problems. Speculation overall seems to be affecting cryptocurrencies if the general goal is to use them as an effective cryptocurrency.

Well! You do have a lot of points put together I must say. One thing actually is that TA, not just in cryptocurrency, but like you said in other traditional assets have become a norm one way or the other, and people obviously get to believe in any patterns that would possibly work out for them and because of that, they all think in the same direction based on their knowledge, and that is TA, which I do not see as the problem here.
 
It is a market, and when it comes to speculation or technical analysis, there is absolutely nothing we can do about it, as they are all part of the market which is why up till now even stock market is not beyond speculation. What we should just be looking at is that, instead of having just a speculated asset in our hands, real life usage will at least bring some sanity to it, and I do not see TA being the problem here, it is just for traders who are trying to make a living and looking for patterns from the market fluctuations.

Complex Technical analysis never really worked for me. It is yet to be proven if TA tools work or not.
Some work a little. especially the less complicated patterns but they are never consistent. They help make things clearer which is their obvious advantage.

Better to just stick with simplest patterns that most exchanges provide.

According to technical analyzes conducted by Chainalysis, “whales” not only do not have a negative impact on the volatility of the crypto market, but, on the contrary, serve as its stabilizing factor.

They believe that only a third of the “whales” are active traders, and basically they go against the general movement and buy assets at lower prices.

And they stabilize the situation in the falls.

Technical analysis may in some points help crypto but in most cases it is still adding to the speculation and volatality as other forms of news also effect it. Looking into investing into any sort of market it is important to stick to facts rather than rely on analysis or speculations as they aren't accurate. Doing a little research and being cautious with investments goes a long way.

In my opinion is yes. Because technical analysis in this market is quite effective. We should say it is a whale psychological analysis. I have some people who specialize in data analysis and make the rules for effective trading very accurately. But it does not last long for 2 weeks so they have to work often to find out the principles of the market.

I doubt it, technical analysis is what bitcoin looks like its doing, something that shows what it is doing can't affect what it is doing.  It is after the fact so it can't be really damaging the before the fact at the same time.

Hence I believe technical analysis not only not damaging cryptocurrencies but it also helps a lot.

There are a lot of times whales do crazy stuff in the crypto world and we see many times when bitcoin should go up but kept under by bigger players and thanks to technical analysis we know that the price is not going down because of a problem but because of the whales.

It also helps us to know when it looks like it is legitimately going down and not manipulated, if you compare what price "suppose to" do and what it is doing sometimes they collide which is the normal one and sometimes they don't and than you know someone is tampering with the price.

A lot of people over the years have ended up condemning TA one way or the other, for some reasons best known to them, but like you said it, Technical analyses are just patterns in the market in which traders look for and no matter what, as long as we get to have institutions in play in most markets, all these patterns will always have a role to play in terms of resistance and support, call it whatever you want to call it.

This however is not what has brought about speculation as that is just something basically on its own, and the only thing that can help out of that is to at least get to see some real life usage which would bring about sustainable demand and less of speculation, but trust mate, speculation is something that will always be part of a market, take it or leave it!

The analytics of our investment are very important to get better than the normal so many of us need to do that and it will definitely be a good way to achieve something.

Technical analysis does not negatively affecting cryptocurrency , technical analysis can greatly help and improve the promotions of the cryptocurrency so that it will be successful for its launching and promotions.

Even though I don't believe in technical analysis of anything by these so called experts, there are those who believe and I think depending on what these analysts bring forth, it affects the marker either positively or negatively.

In all honesty, no researchers or proper analytics have ever measured volatility precisely. Both the negative or positive speculative reports have olnly affected the market.

It seems to me too that technical analysis are like a astrology for traders and it effects the market in a negative way as it nothing but chaos in rough times.

Looks like graphical analysis is not doing any good to the market. It's sure that the experts are trying hard but sometimes it may not just work.

Too much technical analysis is happening recently as the blockchain and cryptocurrency is all new and engineered processing and the sole purpose of its being is hampered and people are more reluctant than ever to accept crypto as their side currency let alone main currency. As we are too busy finding faults with cryptocurrency we are never too much eager to put it even on the reality to see what is going wrong here; we are so into the negativity regarding crypto that, we do not even consider it. New things must have faults but we should let them shine if they really have the potential they proposed they have.

Yes, it is affecting because; People believe technical analysis and they listen to analysis and when we can check youtube we will see there are more analysis for cryptocurrencies and people watch them if the analysis was negatively it is not good because investors will not invest to cryptocurrencies and it is bad for all market.

I guess it only depends on how the analysis is done and how it will be shared to the public. I cannot tell whether it has a negative effect or it will give positive feedback to investors. I just presume that it only depends on how people understand the technical analysis that is done and shared.

I dont know what kind of analysis is that for a Hero Member. Dude are you sure on the things that you have said? How come a technical analysis would able to
affect majority of people who do sees it? I dont know how its done but we do have our own analysis and stuff and if we decide to follow someone then
it wont really be the reason to affect the market majorly.

there is no proof that TA is a self-fulfilling prophecy. people always say that, but we have no idea how many people are following TA (and remember, everyone's TA is different too). we really have zero clue whether TA could change the outcome of markets.

and these traders can't be independent of the underlying economics---they just add liquidity to existing supply and demand. they might alter supply and demand, but why would we assume they negate it entirely?


this makes markets more speculative and volatile. but i see no reason why TA is "running the market" so to speak. TA is merely a method to analyze the underlying supply and demand. it's completely secondary to the actual economy.


there's a difference between "liquidity" and "extremely leveraged liquidity". market depth is good because it dampens volatility and reduces slippage. but if the source of said market depth is massive leverage, that will enable black swan events that can cause cascading liquidations and extreme volatility.

it's not traders that are the root cause of this, but financialization.

If you could only understand what is technical analysis then you shouldn't worry that much on how it is being done. More people like traders does this all the time to predict their next move whether to buy or  sell. But acquiring such knowledge of TA is much more harder than i've expected, it does drain you sometimes and does makes you tired because of thinking everything.

I am believe not many people doing trade in cryptocurrency market because most people are long term investor. Not many people having trading skill knowledge and i think technical analysis just for trader not for long term investor

If a lot of people believes in a particular prediction, they will all be pushed to invest their money and that will make the price of that asset to go high, due to there have been an increase in the rate of demand. I’m also not the type of person that believes in technical analysis, I’ve seen a lot of them ever since I stated and they are never correct. Many ojf them I’ve decided to follow all ended up as  being wrong. So none of them are accurate at all.

Yes, many people understand the way cryptocurrencies are formed but don't know the technical knowledge. Such problems can cause investors to lose confidence in coins.

Well, one way or the other, TA has been working over the years and it will still keep working and it is not Technical analysis that is the problem of this market or what bring about speculation. TA is just for someone trying to look for patterns and trade those patterns, even in life, there are patterns, so what makes it bad, when it comes to a market. Whatever that has cause, I do not know but I would not think TA has caused any issue in this market at all.

Speculation on the other hand, is just something that is basically on its own, and market, as long as people are bidding, will always have some speculative instances. It is just the level of speculation that matters here which we all know that as far as this market is concerned, where there is no real life usage yet; speculation is a norm of the day but would not be like that forever as the market gets matured and usable in the long run.

I myself have never found an accurate analysis that says crypto price movements, I think the decentralization system that is owned by crypto and bitcoin will definitely make crypto make a price adjustment individually.

Maybe yes it can effect negative. Since mostly analyze are against bitcoin. News and media make there own predict and stop people to use bitcoins. Fake news and impact market.

I think it has a positive effect on the contrary, because each time it creates the opposite dynamics to what was predicted by analysts

Technical Analysis is making assumptions. You look past prices and try to predict the future. It is similar to looking back while walking. If you walk on poor or dangereous pavement which is a market opened manipulation, it is likely to fall. In such situations, fundemental analysis works better than technical analysis.You had better focus on news and developments.

Technical analysis can be applied to the field in which the processes obey a certain logic and laws of interaction. This is not typical for the cryptocurrency market. Thus, technical analysis is powerless here, and forecasts based on it are often untenable.

I somehow agree to this and technical analysis might affecting a trader's decision and may also create a confusion where to sell or buy his / her chosen altcoin. Yes, Technical analysis is just another form of speculation where mathematical equation was used. What was predicted on their chart may or may not happen depending on the trader's approach with the market. I said "somehow agree to this" because technical analysis also helps us to make a proper decision or practice our patience. Taking a profit from trading still depends on your patience, observation, greediness and self discipline.

Whenever the false news or analysis appeared people start doing panic sells. Bitcoin and cryptocurrencies markets need more demands but false news decrease it which result market start loosing its price.

Technical analysis is not affecting the market negatively but the traders are misinterpret it to trade wrongly.  Many investors are not even following technical analysis and I mean the whales.  Technical indicators are just there for me and you to lose money.

no matter how many TA, the market is actually creating an illusion of control for you. market movement is just an reflection on majority decision, whatever you do, you cant control the market. just ride the wave.

Better to not to believe these Technical Analysis and make hold your coins for long term period. Sometime TA does not well work for bitcoin as bitcoin is more dependent on news.

The issue here is that so many individual thinks technical analysis should just give them an accurate 100% prediction to the direction of the market. If it is like that, who is going to end up losing in the market? I hope you have forgotten that part of trading strategy involves stop loss as well, and if TAs is 100% accurate, no professional will be making use of stop loss even in more matured markets.

What we do here is a game of prediction, with TA there to guide us in the next step to possibly be taking, and you should never forget that it is just an analysis meant for directional and decisional purposes, and it is not meant to give you the right prediction all the time.

As far as I am concerned, Technical analysis is just a part of the market, and there is nothing anyone can do about it. It certainly does not affect anything positively or negatively, they just seem like some trends or something, even though it is something that a lot of people have collectively placed there themselves, but in the real sense, it is just some normal thing to just trade the market.

Well, if we say TA sucks, maybe we should try not even using TA at all and see how that would turn out. The problem with the market entirely is that is more speculative in nature, but that has so many difference from TA on its own.

Right. Ta's affect directly the person who uses it or those that rely on tips by people who use it. And the effects vary since not all who know ta can have all positive outcomes. There will be failed trades based on ta and successful ones but no general effect on the market itself.

I myself do not think that technical analysis has any bad effect of bitcoin, I think that it is important for the investors to have good analysis about the market so that they can a right decision in a right time, but in fact only an expert person can give you a good analysis about the market.

but in my opinion technical analysis helps us to analyze, because none of analytical methods are 100% correct. therefore, aside from technical analysis, it should look at development of news that will occur

Technical analysis is a feature that the trader's price estimate is related to psychology. It is the movement of people with less money to influence the price, so moving together means investing big money. TA doesn't always have to work, it is only an estimate. Sometimes fundamental analysis aslo doesn't work, so the news don't come as you expect. These are just the price prediction features and it is not possible to move without them.

I have to agree. All these technical analysis is merely a technical term for a guess. I myself do this but backed up with trends from way back. And i still get it only 2 in 5 times at a time. I guess you can use a technical analysis as maybe a suggestion when investing but all in all we all should just read up and analyse ourselves the coin we are investing in.

Technical analysis of the market is sometimes a strategic move to make good impression of the market. Of course there are still people here in cryptocurrency who are so techical. But, most of the new investors are just here for profit not relying on techicalities, instead relying on news without knowing that most of the news were fabricated to influence the mind of investors.

I even wonder why someone will call something that has been in existence for a very long time in traditional markets as a problem for cryptocurrencies. If we are saying there should be no technical analysis at all, then probably we should be saying there should be no trader at all as well, and the market should basically be moving based on the rate at which people buy and sell only.

However, we have to understand one basic fact that the market is filled with traders and by traders, I am referring to both institutional and retail traders, and in this way there will always be a pattern as it is this pattern that brings participation into the market, and makes the market makers to at least keep making some money in the long run, while traders anticipate as well to outsmart other retail traders, so in a way, it is just a part of the market and i do not consider it a problem at all.

Technical analysis have been alive even before cryptocurrency came into play and has been a guide for most traders to always anticipate for what is next and that makes me wonder why anyone would think it is a problem.

Whether we like it or not, we will always have institutional investors, whales and retail traders, who will always want to take advantage of market fluctuations and those fluctuations are just a part of the market that has a lot to do with demand and supply, and there is absolutely no way you will not have to see technical analysis coming into play.

Technical analysis is basis of trading and I do not understand in what way is can negatively affect on cryptos 0_0

Perhaps the newbies following Coindesk and co. analysis and the telegram channels. ::) Following real analysis you still need to use your own feeling in the end, an analysis from someone else is just a parameter in your decisions.

Technical analysis does not work when there is panic or excitement in the market. Now everything is stable enough and technical analysis works. I now often use technical analysis and lately it has been justifying itself in the short term.

You may not like technical analysis when the resultant effect is a negative effect on the price of cryptocurrencies. But you should also not forget that Bitcoin and the entire cryptocurrency market has gotten to the positive heights today as a result of the same technical analysis. Without such analysis, people may not get to truly know about cryptocurrency.

OP, I agree with everything you said, except for the following:


Crypto community can simply ignore this "financial voodoo science", as The Pharmacist called it above, and keep moving on.

For those who think, based on their experience, there is a correlation between some TAs and the actual market movements and that that's why we can say that some of the predictions are legit, I would like to remind that if many predictions were made, about anything, there is always a possibility of some of them to come true, no matter however stupid they were.

this gets back to the "self fulfilling prophecy" idea, which i think is bogus. the idea that the market follows traders, rather than traders following the market, means the tail is wagging the dog. how likely is that?

traders merely join markets and try to trade around an existing trend or range. they can affect supply and demand, but the long term net effect should be negligible because they eventually close their positions. when it comes to traders, every buyer is also a seller, and every shorter must buy back his borrowed coins.

i am always believe cryptocurrency like bitcoin is long term investment and people using technical analysis because they just want short term investment and make profits from market fluctuation

I think yes, it is because many people are reading and searching news over the internet. It is their strategy to manipulates the mindset of the people.

Technically yes because on my own analysis its not actually affecting the market negatively but the traders are misinterpret it to trade wrongly so many investors are not even following technical analysis and so technical indicators are just there for me and you to lose money.

it will not affect to the market actually. because actually TA is done naturally to give traders the views and predictions of what will happen to prices in the market in accordance with supply, demand, politics, news and so on. TA does not have any adverse influence on the market

Your second point is mistaken, it is the other way around, if a new indicator can be proven to work in the market that indicator is going to stop working if everyone begins to use it, remember the majority cannot be profitable in the market because you are not generating money, money is just exchanging hands and for that you need to be part of a minority and if everyone knows about a particular indicator and how to use it then it stops working.

Not all the time Technical analysis give negative effects in cryptocurrency because mostly it help many of us to know what the real situation, Technical analysis is like an indicator if there are changes in the crypto price or in the market. But some of us don't believe to it because they used their instinct than the technical analysis which sometimes what there instinct is happen.

Other who are on the negative side of the cryptocurrency will be negatively be affecting by this technical analysis , because this will guide the good path of a certain platform or project to be promoted and launched, those team that runs scams and fraud project would b6e affected by this technical analysis, but to the team that are honest it would be a lot of help to the project.

The OP has said it all right from onset I am not a fan of technical analysis in Cryptos trading because in most cases  bitcoin do defies any form TA  in trading with the current dumping as a case study the price had broken many strong support zones easily without any bullish sign where TA traders would have envisage a turn around.