Topic: Which technical indicator is more preferred in technical analysis? (Read 293 times)

low volume and thin market depth are two sides of the same coin. volume is low because there is no liquidity. so i agree, we can expect high volatility because of that (the timing of which is unpredictable).

but the charts do tell us when accumulation is happening. so it's not just like taking a shot in the dark. it's more about sitting on investments while they're in accumulation phases, waiting for larger fish to eat up all the sell-side liquidity. once that liquidity is all gone, the price gets marked up. simple supply and demand.

i know manipulation is rampant, but i'm less interested in short term price spikes anyway. i'm looking for long term setups that develop over months, not pump and dumps.

Wrong question, you should ask which indicator is preferred by traders, and it is MACD crossing. Just look at the pumps, they all happen on MACD crossings, as a risk reduction strategy.
The problem is to guess on which time frames the pump will happen, and if you miss it (you only have minutes to panic buy), where will the following minor correction find support.

I use different trading systems and indicators, depending on coin, timeframe and trading style.
For position and swing trades I prefer to use Ichimoku with doubled settings for Bitcoin. Basically trading Kumo breakout, TK crosses and bounces from Kijun and Tenkan Sen with that System. Mostly hour and 4hour time frame as they give pretty good signals.

When I'm scalping (3min, 5min, 15min) I use a combination of BBands, MACD and RSI and TDI.
So I like to keep things simple and use mostly pretty known indicators.
Always have an eye Volume of course. As an addition to that for support and resistance I'm using Volume per Price (Volume Profile). That's it.
The rest is chart patterns and candle stick formations.

Because low market cap coins also have low volume, and that causes higher volatility. Higher volatility causes more unpredictability. 


Agreed.


Ok. Now I am confused. Are we in agreement now or are we arguing? Haha.


Besides asking for fundamental reasons, another question you should ask yourself, "is this altcoin being manipulated?". Hahaha.

The answer is usually yes.

I use fibonacci retracement and fibonacci extension for the potential support and resistance. I also use trend lines and then the leading and lagging indicators. As for the leading indicator, I use Relative Strength Index (RSI) to know if the coin is already overbought or oversold which would signal me then of a potential reversal of a trend if ever. For lagging indicator, I use Moving Average Convergence Divergence (MACD) like a confirmation of the trend reversal if there is a crossover. I look at the shapes and formations of the candles as well.

Each of us has different indicators to speculate the market but there are times when these indicators will be effective because majority of the traders use it. It is not because of the math behind it why it is effective but because majority of traders think alike when a certain price level is hit that's why a potential support or resistance price levels becomes a self-fulfilling prophecy. No matter what technical indicator you use as long as you understand the purpose of the indicators and have a proper risk management then you can be profitable.

but why do they have the highest volatility? and why does it follow that TA doesn't work then?

the bottom line is supply and demand. so, the key to understanding volatility is market depth. the reason BTC used to be so much more volatile (back in the day we used to see 50% swings in a day) was because of an utter lack of liquidity. whales could easily move the market---high demand into low supply.

low cap altcoins are the same way. due to the "cheap" price vs. BTC, whales can accumulate in a range until all the market liquidity is gone. and then? the only direction is up since there are no sellers left. the lack of market depth makes a 10x move very easy, like a hot knife through warm butter. this is the same exact thing we saw on the BTCUSD order books in 2013. all the supply disappeared, so the price skyrocketed.

so, it's really not about TA vs. FA. both should reflect the same thing. fundamental analysis (supply dynamics and catalysts for demand) will tell you why demand may overtake supply at a given price level. technical analysis looks for clues re supply and demand on the charts: does every dump attempt get bought up? has price risen above a major supply level, indicating further upside after resistance becomes support? does volume indicate major accumulation or distribution? all of this is valuable information to a trader.

FA for context: is this something i want to invest in, and are there fundamental reasons for increased demand? support/resistance and volume analysis for the rest.

Well everyone cannot be a winner, but that does not diminish the fact that technical indicators have their place in reaching of market decisions. The situation is like in every other life's  situation, what works best for one person may not necessarily work for another. I like to trade breaks and bounce off support and resistance  levels and my analyses usually involves the use of Bollinger Bands, trendlines and RSI.

in order to find your own indicator, you need a lot of practice and experience in this matter. Then the person will be able to really assess his capabilities and act at his own discretion correctly.

Just a disclaimer: these are my just my thoughts and will not definitely represent the ideas/techniques used by the veteran traders in this market.

Anyone can site different indicator that they usually use in their trades and they can always provide proof that these are very helpful in their own ways. The thing here is that different traders favor different indicators and some of this are not useful on other trader's end. Two of the most used indicators that I god with are RSI and MACD. These are simple ones that usually provide me information on whether I should buy (long) or sell (short) specific coin. Not all of my trades are successful (this is very normal in cryptospehere) but it is definitely profitable in the long run. The trick here is to find what is suitable to your setup. Don't fit yourself to what is generally used but find your own indicator. 

All the indicators of technical analysis are prominent because they have their specific role to serve. Preferably I don't go without checking On balance volume, Relative strength Index, Average Directional Index. The main traits of these indicators that make them prominent to me:

● OBV informs about the flow of volume in relation to its price. So volume is an important indicator to determine whether to go for the security or not.

● RSI helps to measure the strength of the security and how can this indication be missed while doing TA.

● ADI gives information about the momentum of the relative security so definetly it makes it important to check.

True. Most of times I have ended up buying some coins at their ATH or something the local peak price. Following any of these indicators has proved to be a loss for me, or maybe I'm doing it wrong.

I believe you do not get "why" some technical indicators are not applicable to low market cap coins. The reason for this is because low market cap coins have the tendency to have the highest volatility in the market. So what happens is all their predictions based on "technical analysis" also has the tendency to not predict the market, making them, most of the time, "off the mark".

Also technical analysis does not apply to coins with a low market cap so this means that technical analysis only applies for the top 100 coins the rest of the coins need to be traded using fundamentals and by keeping your eyes on the news and the hype, this is why even a master at technical analysis will lose his money if he keeps his eyes on the charts on those coins.

It is not because technical analysis just "does not work". It's because most of us do not know how exactly and when to apply it. Most of us are nothing but amateur traders who are going against the "pros" who are better and who have the experience.

Plus more than 90% of traders are losers, not 80%.

1) Horizontal support and resistance. Pivots and breakout areas.
2) Volume for identifying capitulation and breakout conditions. For example, deep crashes that end on very high relative volume is a huge buy signal. Declining volume as the right shoulder forms in an inverse H&S is a confirming factor. Etc.
3) Bollinger bands identify when to "pay attention", that is, when a breakout is coming. Breakouts that follow major BB squeezes on daily/weekly charts have been my most profitable trades ever. Consistently. BBs also help to identify relative highs/lows for better entry and exits.
4) Golden crosses and death crosses to suggest trend continuation. For example, MA50/MA200 crosses.
5) For long term analysis, Wyckoff cycles and Elliot Wave. Not for short-term analysis and definitely not for prediction. These tools are for identifying possibilities and confirming them, not predicting. I hesitate to mention EW because the vast majority of people misunderstand and misuse it (just like all TA).


Most traders are losers. 80% or more. TA doesn't just work. TA (when done correctly) just suggests statistically EV+ trades given proper risk management. Even if your charts are good, you will consistently lose money if you can't manage risk.

Ten small winners are easily wiped out by one big loser. That's what most people do. Then they say "TA doesn't work!!!!!!11!" Wrong.


RSI and similar indicators are useful in a range market, but dangerous during trends.

I generally only care about "oversold" when we are in a raging bull market. During bubble periods, the 1-min chart + Chande momentum or RSI is useful for scalping oversold conditions.

In cryptocurrencies trading you should pay more attention to fundamental analysis more than technical analysis. However, based on your questions I will advice you to study candlesticks formation in other for you to understand the chart pattern in cryptocurrencies trading. Trading is game of knowledge and money management principles and you have to understand the directions of trends most at times in other for you to be able to trade along with it.

Ya I don't put too much stock into TA but when I do I use RSI, MACD, and SMA for trying to make decisions. Volume is a useful tool too and I look to that when coins are pumping.

Self-fulfilling prophecy is a real thing. If enough traders believe that certain indicator(s) forecasts upcoming bull run - they start buying and the price is actually going up. Or the other way around.

Side note: Everyone who got into Bitcoin anytime before the Nov/Dec rally is a winner.

Hahaha and the price when it's dipping!

But seriously, what do "technical indicators" really do for most people? Nothing. If it really did then everyone would be "winners". But sadly that is not the situation. 

Exactly ! But when I use the RSI indicator, I also use the MACD indicator. The use of this for me is just like the RSI. I saw it there when there is an oversold and overbought on a particular coin.

In cryptocurrencies trading in prefer using fundamental analysis in combination with  candlestick formations as this provide a wider view on the state of the market.  However, what influenced cryptocurrencies the most is news and fundamental issue that affect cryptocurrencies and if you want to make money from it you should keep your eyes on this.

and right. volume can be an indicator where we will do the analysis. will become invaluable when we know the real volume and seek common ground where at the time of determining analysis and aligning with the analysis that comes after it

Yes, RSI seems useful in terms of overbought or oversold condition.

volume

For me, there is really no preferred indicator as they all serve their purposes, and you need most of them to have a concrete decision on the step to take before entering a position. However, for some reasons, there is just one indicator I cannot do without which is the Relative Strength Index (RSI) since I can use it to serve two purposes, which are checking for oversold or overbought asset, as well as confirm either a bullish or bearish divergence.

Just wan to ask about which technical indicator is more preferred when you do technical analysis, your comments will be highly appreciated.