How to Combine Technical and Fundamental Analysis for Smarter Trading | Webcast 52
Museigen co-founder, Fermin D. Barrenechea III and John James C. Genove, known as Resistance Trader, explained how cryptocurrency traders can combine technical and fundamental analysis in their trading strategies.
What’s the significance? Combining technical and fundamental analysis allows cryptocurrency traders to make more informed decisions, manage risks better, and develop robust trading strategies.
What is technical and fundamental analysis?
- Technical Analysis utilizes historical price and volume data to forecast future price movements, focusing on chart patterns, technical indicators, and trends for short-term trading decisions.
- Fundamental Analysis evaluates a token’s true value by examining its financial health, economic context, industry environment, and management competence.
Key explanations by Fermin Barrenechea:
- Fundamentals: Help determine why to invest in a coin (e.g., news events or institutional interest).
- Technical analysis: Reveals when to enter or exit a trade by identifying patterns in price movements and following the signals of major market players, like whales.
Key quote:
“Fundamentals will help you determine why you should enter a particular coin. Technical analysis will tell you when you should enter that particular coin… The fundamentals help you determine why or if you should enter the token for an investing position and the technical helps you determine when to enter (and) when to exit… There is no right or wrong, again both of them are useful. They both have their own strengths but they do have their limitations.”
Fermin D. Barrenechea III, Co-Founder, Museigen
Technical Analysis Example: Elon Musk’s tweets may not make a coin fundamentally attractive, but technical analysis can reveal profitable patterns.
- Some coins may not be good long-term investments but can still be traded profitably based on technical analysis.
How to use Fundamental Analysis?
According to Genove, fundamentals are used as an indicator to find signals in price action and predict market direction, but traders do not solely rely on them, unlike in foreign exchange where market volatility is highly influenced by news:
To leverage fundamentals in crypto trading, traders assess their impact on trading signals based on their indicators and trading plans.
Between the lines: Genove highlighted that crypto whales can defy traditional fundamental factors, significantly swaying the market independently of institutional investments.
- Despite large purchases by fundamental traders, prices sometimes still drop, indicating that the cryptocurrency market is heavily influenced by crypto whales rather than fundamentals alone.
- Traders need to pay close attention to technical analysis to understand market sentiment and whale activities.
However: While technical analysis is essential for timing trades, it doesn’t always reflect the long-term potential of a coin.
- Fundamentals are still important for long-term investment decisions, even if they are sometimes overridden by whale actions in the short term.
This article is published on BitPinas: How to Combine Technical and Fundamental Analysis for Smarter Trading
What else is happening:
