why is it difficult to apply TA on altcoins with low marketcap

[caffu chino]

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

[1713306616]

1713306616

[1713306616]

1713306616

[vv181]

How low is low? You didn't name the altcoin and the market cap. Also, you better move this thread to the Trading Discussions board, I believe you will have a more insightful opinion on there.

Anyway, since I didn't know how low the market cap is nor the knowledge of technical analysis, IMO, it's worth the attention to inspecting the fundamental analysis on low market cap coin, it's way better if you want to risk your funds on a barely known--since its has low cap and volume--cryptocurrency.

[caffu chino]

How low is low? You didn't name the altcoin and the market cap.

not too low, more or less a coin with a marketcap of $100M and a trading volume of $10M. one of them Banana(apeswap) #368 on coinmarketcap. I made an analysis for this coin a few weeks ago. At that time I saw the price had reached the resistance point, and I bought it. but so far the price has not gone up.

[jrrsparkles]

How low is low? You didn't name the altcoin and the market cap.

not too low, more or less a coin with a marketcap of $100M and a trading volume of $10M. one of them Banana(apeswap) #368 on coinmarketcap. I made an analysis for this coin a few weeks ago. At that time I saw the price had reached the resistance point, and I bought it. but so far the price has not gone up.

TA will not work all the time, infact if you apply different indicator you will also get different results compared to your previous analysis so  understand that price not only move based on market movements it depends on different factors like news, manipulation,etc.

[masterrex]

How low is low? You didn't name the altcoin and the market cap.

not too low, more or less a coin with a marketcap of $100M and a trading volume of $10M. one of them Banana(apeswap) #368 on coinmarketcap. I made an analysis for this coin a few weeks ago. At that time I saw the price had reached the resistance point, and I bought it. but so far the price has not gone up.

Sometimes things don't work as intended to be, But who knows it will be bounce-back soon just stay focused and have extra patience because cryptocurrency investment needs a lot of patience, Anyway I think ApeSwap Dex was working well and their banana token price is also stable, so just wait and hold otherwise if you are tired of doing it there's a lot of prospect in the market especially in the low Marketcap rank.  

[awik p]

In my opinion, altcoins with low market cap are difficult to analyze because the market is very easy to manipulate. someone buys it not because the price is in the support area, but anytime they are able to play with the price, on the other hand because there are still few investors in it, so the trading volume is still low, so trading seems unhealthy without being interfered with by various points of view from many traders

[Sollaes]

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

The answer to this question is rather simple. We can use Technical analysis when we work with mainstream currencies or any assets that are popular and wide-spread as there are many traders around the world who see the same patterns and indicators and take the same steps, as a result, the market adjust to their actions and change the trend. But there is a low liquidity in low market cap coins, so nobody pump or dump price according to TA. 

[pawanjain]

some time ago I bought an altcoin which has a low marketcap and trading volume. I bought after analyzing using technical indicators. After a while I realized something was wrong. it should be if based on my analysis the coin I bought has entered an oversold period and the price should have started to reverse. but in fact it never happened. the price may go up, but it doesn't last long and it goes back down. then I also bought another altcoin which is almost the same. and again, I also experienced the same thing even though in the end I got profit thanks to long-term hold.

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

It's quite simple. Altcoins with low marketcap are difficult to predict because it requires a low volume to manipulate it.
Also the price swings that you encountered may also be because of the recent hike in bitcoin's price.
Many altcoins which were dropping in price suddenly increased in price when paired with USDT because the price of bitcoin increased a lot recently.

[Beparanf]

Technical Analysis won't work to small caps coin because it has a limited volume that prone to high price impact if you bought a certain amount and also only few trading it. TA works as self fulfilling prophecy so if no one doing TA on it obviously all signal you can get on your own TA will not gonna reflect to others thought that's why there is no reason for a price pump base on signal you get.

Remember that TA is just a method to interpret what will be the possible price outcome in the future by using past data but it doesn't it was accurate at all time especially if the price is volatile due to lack of liquidity. TA is impossible for that.

[The Cryptovator]

First of all, we know cryptocurrency prices depend on supply and demand. A low market cap means there is no demand for that coin and there is enough circulation as well. So the technical analysis would fail to predict accurately. I believe no predictions are accurate, a few predictions become true and few become false. The analysis wouldn't help if market demand isn't predictable which is quite impossible for low market cap coins. So I think that is the reason why low market cap and low volume coin wouldn't follow TA.

[shinratensei_]

, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict.

You will not be able to predict it as it has low volume as well. The altcoins with low marketcap will not have big daily trade volume. that means the market can be easily manipulated. The whales were also playing on these low cap coins as well. It can be easily dumped or pumped anytime. Your TA will be worthless. Im sure about this.

whether this is all related to manipulation or there are other reasons that make it difficult to predict.

That's related to the manipulation that happened in the altcoins. that's the main reason why TA will be so difficult to be applied in small cap coins. You can't predict altcoins that can be pumped or dumped in less than one minute. The movement was random. It can't be predicted easily.

[lumierre]

If demand is low, no indicators and other instruments of technical analysis will work. Even if this coin is oversold and it is still unpopular and there are no investors who are willing to buy, it will stagnate. You had better pay attention to the project itself and marketing campaign (advertisement and news) rather than to technical indicators in terms of low market cap coins.

[Review Master]

Then I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

It's not like, every TA will be right as few trades won't be successful according to our TA, even for top altcoins. But it's also right that altcoisn with low marketcap are quite difficult to predict rather than top altcoins as whales can manipulate those and small traders got rekt for that. So most of the time, it's happened because of the manipulation from whales as well as few P&D groups also do the manipulation.

[herurist]

when talking about TA, I think this is something that is only used as an aid, not a reference, because apart from that, all TA is just various formulas that are applied to convince us to speculate, as for the reality it can be right and it can be wrong.
I think you are quite good at doing something because by analyzing something based on the observations you see, but indeed the reality is that it is back again, speculation is 50-50 about this, it is the market that decides.

[blockman]

TA doesn't really work at most times. We're just humans that can analyze charts and projects but there will be times that we're not really accurate at all.
It's hard to depict these low cap altcoins because they are low cap and there's not that much to expect from them. But on the other hand, there are altcoins that are really good despite being low cap and if seen with potential, the cap increases.

[cryptomaniac_xxx]

Maybe because it was the low marketcap that TA can't be applied to it, the data is so small that you can't get any from plotting and applying analysis.

This was the case on bitcoin in the beginning, very difficult to predict using TA because there is no data to begin with. And just to add though, maybe whales are manipulating the price as well, the pump and dump scheme which is very known for an altcoin that has low marketcap.

[jostorres]

I started thinking and wondering, why is it difficult to apply technical analysis to coins with low market caps. unlike bitcoin and other major altcoins whose movements are still predictable. Altcoins with low market caps are difficult and even impossible to predict. whether this is all related to manipulation or there are other reasons that make it difficult to predict.

The primary factor we need to consider before getting into technical analysis of any asset must be, healthy volume. Because only if a coin is having good volume then we can sure about less manipulation. I mean if a coin is having very low volume on daily basis then it must be a candidate for high manipulation from its devs or from any whales. So, it is highly recommended not to consider all low volume coins because any kind of technical analysis will NOT be working against manipulations.

There should be multiple things we need to consider before choosing an asset for trading through technical analysis. If you are buying signal some third-party and trading one asset could be something different but when we are spending time and efforts for technical analysis then we should choose a right coin which is free from all kind of manipulations.

[crzy]

TA works on everything, so I don't see any connection of the market capital where you can easily plot the indicator and use it for your investment decisions. TA might not be reliable most of the time but for me it works you just have to use the perfect combinations to become more successful in trading because if you do TA you don't focus much on fundamentals but more on a price trend.

[Slow death]

the answer is the following:

when the price of bitcoin goes up the price of altcoin against bitcoin goes down

1 - in this scenario you always need to do technical analysis of altcoins in relation to bitcoin using the 4H chart, if you use the 1h or 15 minute chart they can mislead you,

2 - always hope that bitcoin is not too volatile preferably bitcoin price needs to be stagnant

with these two requirements you can do your analysis well

[Quidat]

How low is low? You didn't name the altcoin and the market cap.

not too low, more or less a coin with a marketcap of $100M and a trading volume of $10M. one of them Banana(apeswap) #368 on coinmarketcap. I made an analysis for this coin a few weeks ago. At that time I saw the price had reached the resistance point, and I bought it. but so far the price has not gone up.

Not surprising.Why? TA's doesnt basically works all the time and going back into those years 2014-2016 then reading up and putting good analysis doesnt really bite out no matter
how well you had made it out which basically shows that TA's arent really that effective not like now that It is gradually trying to move in similar manner but still
its unpredictable due to some factors and that what makes it more harder.

To tell about low cap coins? They would basically be having that much liquidity or price movement if you do ask me.Better get used to it i would say.