The ability to predict the price of an asset in a certain market is certainly crucial for a trader for it either makes or breaks his trades, but how does one predict the price of an asset? There are two main methods used nowadays: fundamental analysis and technical analysis.
Fundamental analysis – a popular method among traders to predict the price changes of assets in the crypto market. Fundamental analysis is based on the analysis of the indicators of the economies of the leading countries and statistical data on the developments of economic sectors, issued by the major countries. Fundamental analysis also takes into account important political and financial news, which may affect prices. Based on the nature of the information being analyzed, conclusions are drawn about the direction the asset’s price will take in the financial market.
Technical analysis (TA), or charting, is a type of analysis aimed at predicting future market behavior based on historical price movement and volume data. AT is very often applied to stocks and other assets in traditional financial markets, but can be used in cryptocurrency trading.
Unlike fundamental analysis (FA), which takes into account multiple factors to predict the price of an asset, TA focuses strictly on historical price movements.
It is therefore used as a tool to examine price fluctuations and volume data. Many traders use it to try to identify the most profitable trends and opportunities.