Is technical analysis useful in cryptocurrency trading?

Technical analysis is the study of price data.

Although I am a technical analyst by trade I use both fundamental and technical analysis on a day to day basis.

The fundamental side of my analysis firmly revolves around sentiment. If for example a central banker is speaking about cryptocurrencies and is very negative of course the price will sell off. Just look at what happened with Fed’s Powell and SNB’s Jordan the other day.

Having said that, who is to say where the price will stop? This is the key value of technical analysis. The levels!

In terms of relative value how can you decide what value is without looking at the past?  

Another key strength is analysing volume. Most of the time I use the volume data from Binance or Coinbase. The bigger the exchange the better in my opinion. If a coin starts to sell off and its on thin volume you may realise that the sell off may not last and vice versa if the selling is backed by the mass market you may choose to go with it. Another key value of volume data is finding new coins that could pop. I often use third party sites to see what the top 20 coins are for the day in regards to volume traded. If it is one I have not heard of, I will do some research and decide if it has any value or not.  

Risk management with technical analysis is also useful. I cant imagine how I would place a stop loss without looking at my charts. I often place stops at previous wave lows or key support and resistance areas and without charts I would never know what they are. There is also something called a trailing stop. This is when you keep moving up your stop loss when you are in profit. That way you can lock in some profit if you are away from your screen and the price crashes.

Fundamental data and news is one of the most important tools a trader could have I cannot stress that enough. The day the Bakkt exchange story was released was one that sticks out in my mind. The reason being is because price took soo long to react. I was waiting a good 5-10 minutes before it took off like a rocket. the fact is that it did and those positive stories can sometimes be a major driver of price.

All trading systems have a win and loss rate. Its all about predictive power and probability. The risk/reward ratio and win percentage are they key points, it is also important never to over leverage. Try and stack the odds in your favour!

I want to finish off by saying as a trader one cannot live without the other. The main sentiment may be moving off the fundamentals but how can you have risk management and price targets without technical analysis?