Technical analysis: Increase in prices
Do you want to use the technical analysis to trade successfully? In this section you will learn how to achieve satisfying returns by using the technical analysis for the bitcoin value.
The chart below, figure 1, shows you the exchange rate of the bitcoin. When the blue and red lines cross, this represents a break in the trend: the value might change direction. As there was a clear break in the trend on the left hand side of the chart, we decided to speculate that the price would increase.
Figure 1: Investing in bitcoins –The value of bitcoins increasing, opening a buy position.
Due to the break in the trend, we thought that the direction of the bitcoin value would change. As you can see in Figure 1, this happened almost immediate after the lines crossed and the time we would have opened our buy position.
After a few hours the lines crossed each other again, signifying a new trend. Based on this observation, we decided to close the position and enjoy our small profit. The advantage of online trading is that you can always keep an eye on your open positions.
The result from the technical analysis
Our investment amount was £133. Thanks to leverage, 1:20, this enabled us to trade on 1 bitcoin that was worth £2660. As explained earlier in the course, leverage allows you to trade with smaller amounts to magnify returns.
The bitcoin value, as the technical analysis predicted, proved to rise. The price reached £2720 a few hours later. As we forecasted a rise in price, we enjoyed a modest return – in such a short time, we were satisfied!
Figure 2: Investing in bitcoins –Bitcoin result.
Naturally, this is not the only strategy you can use for trading. Ultimately, it does not guarantee a successful trading experience.
Trading on speculation?
Do you now want to make optimal use of technical analysis for speculating? Like we do?