What we know about the charts and technical analysis? Talking about crypto currencies, we all have our clear biases, which is exactly why this question needs to be asked. It is well known, that technical analysis provides the only mechanism to measure the emotional component present in this market. The truth is: people set price, people form the chart. The only thing a trader should do is to study a human behaviour. In other words each pattern has its own psychology which should be explored.
The markets communicate with us. It is human nature, unfortunately, to see the market as we want to see it, not as it really is.So, Let’s have a closer look at market sentiments. What’s the market behaviour that resulted in these particular patterns? Technical analysis actually is a very effective way of analysing market movements and we can monitor these messages by using the technicals.
The traditional “Supply and demand” sets the price of something. And the chart is a graphical illustration of the historical price movement in supply and demand.
In brief, we can conclude that technical analysis provides a graphical representation of the market psychology at any given moment.