So I spent yesterday studying some concepts of Technical Analysis / TA, and today I wanted to experiment with small amount of money to see if I’m understanding right.
**BE AWARE : I’m a Noob, the sole purpose of this post is for someone to correct my understanding.**
# So I’ll start first with what I learned :
*All the following is from Binance Academy :*
1. [**MACD**](https://academy.binance.com/en/articles/macd-indicator-explained) :
> MACD is a trend-following tool that utilizes moving averages to determine the momentum of a stock, cryptocurrency, or another tradeable asset.
> MACD indicator consists of three elements moving around the zero line:
> The MACD line (1): helps determine upward or downward momentum (market trend). It is calculated by subtracting two exponential moving averages (EMA).
> The signal line (2): an EMA of the MACD line (usually 9-period EMA). The combined analysis of the signal line with the MACD line may be helpful in spotting potential reversals or entry and exit points.
> Histogram (3): a graphical representation of the divergence and convergence of the MACD line and the signal line. In other words, the histogram is calculated based on the differences between the two lines.
> Still, the relevant signals of the MACD indicator are related to the so-called crossovers, which happen when the MACD line crosses above or below the centerline (centerline crossovers), or above or below the signal line (signal line crossovers).
> Keep in mind that both centerline and signal line crossovers may happen multiple times, producing many false and tricky signals – especially in regards to volatile assets, such as cryptocurrencies. Therefore, one should not rely on the MACD indicator alone.
2. [**RSI**](https://academy.binance.com/en/articles/what-is-the-rsi-indicator) :
> By default, the RSI measures the changes in an asset’s price over 14 periods (14 days on daily charts, 14 hours on hourly charts, and so on). The formula divides the average gain the price has had over that time by the average loss it has sustained and then plots data on a scale from 0 to 100.
> The RSI is also an oscillating indicator that makes it easier for traders to spot overbought or oversold market conditions. It evaluates the asset price on a scale of 0 to 100, considering the 14 periods. While an RSI score of 30 or less suggests that the asset is probably close to its bottom (oversold), a measurement above 70 indicates that the asset price is probably near its high (overbought) for that period.
3. **DEPTH** (My own understanding) :
Basically the balance between the buying pressure and the selling pressure.
4. I also learned about [**Bollinger Bands**](https://academy.binance.com/en/articles/bollinger-bands-explained) but I didn’t get to use it, maybe I don’t understand its purpose well
## Now we come to my understanding and how I applied it :
[Image No. 1, Interval = 1h](https://iili.io/BW5TN9.jpg)
[Image No. 2, DEPTH ](https://iili.io/BW5Wog.jpg)
Firstly, The cyan vertical lines seen in Image No. 1 represents the moment of the divergence of the MACD (i. e. when the green turn red or vice versa), this usually means (*and definitely NOT always*) that the trend is reversing.
Secondly, It’s essential to compare it to other Indicators, so as you can see we can look at the RSI value at the moment of the divergence and it’s low (i. e. around 30 or less) then we can be more sure (*Still not certain*) that the trend will reverse.
Thirdly, we can check the depth (seen in Image No. 2), and it’s supposed to be in favor of buyers, and that will make us also more sure.
[Image No. 3](https://iili.io/BWYf24.jpg)
In Image No. 3, pay attention to the first trend line I drew(The purple one), the trend looked it was going to reverse soon until…. Fucking Elon Musk tweets about Bitcoin, and a new dip began.
Now pay attention to the second trend line (the yellow one), it’s so close to converging and with RSI values around 30, The trend will probably reverse and we’ll hopefully see a pump.
### And that should be it!
Please tell me if I’m missing something or if I’m understanding something wrong (even if it’s all wrong)
Also tell me if the photos can’t be opened, I’m using Joey For Reddit.
Happy pump everyone! (at least I hope)