Update and rename defi_and_trading/day-trading/technical-analysis.md to defi_and_trading/day-trading/technical_analysis/README.md

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# Technical analysis
## technical analysis
<br>
## What's technical analysis
### tl; dr
* uses trading data to analyse and predict price patterns
* gives us data points to compare and contrast
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---
## Candlestick charts
### candlestick charts
* data rich trading analysis
* time and price details
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<br>
### Hammer pattern
##### hammer pattern
* bullish pattern
* sellers drove price lower during the day
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<br>
### Shooting star pattern
##### shooting star pattern
* bearish pattern
* buyers drove price high
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</p>
<br>
### Bullish engulfing pattern
##### bullish engulfing pattern
* bullish pattern
* bullish candlestick "engulfed" the bearish candlestick
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</p>
<br>
### Bearish engulfing pattern
##### bearish engulfing pattern
* bearish pattern
* bearish candlestick engulfed the bullish candlestick
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<p align="center">
<img src="https://user-images.githubusercontent.com/1130416/172072097-e9058226-65b4-43ff-a017-f2a235691fc6.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
</p>
<br>
----
## Chart patterns
### chart patterns
* used in conjuction with candlestick charts
* longer-term analysis of market movements
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* dont tell about longer term trends
### Double top
##### double top
* bearish pattern
* buyers tried wtice to push price higher
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</p>
<br>
### Double bottom
##### double bottom
* bullish pattern
* sellers came in twice
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<br>
### Asceding triangle
##### asceding triangle
* charts never trade in a straight line
* charts trend
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<p align="center">
<img src="https://user-images.githubusercontent.com/1130416/172072378-59cffb28-7589-44fc-8e54-b040ec239496.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
</p>
<br>
---
## Trends
### trends
* we can't trade from patterns all the time, they are quite rare
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<br>
### Asceding wedge - higher lows
##### asceding wedge - higher lows
<br>
<p align="center">
<img src="https://user-images.githubusercontent.com/1130416/172072540-324afc3d-0b31-4ffd-ab4f-96a829d244bf.png" width="40%" align="center" style="padding:1px;border:1px solid black;" >
</p>
<br>
### Desceding wedge - lower highs
##### desceding wedge - lower highs
<br>
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</p>
<br>
### Consolidation
##### consolidation
* give us a strong area of trade where traders have been before
* area in the chart moving sideways
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</p>
<br>
### Support and resistance
##### support and resistance
* support and resistance are simply significant price levels
* resistance can become support if a price breaks through that level in an uptrend
* vice versa for a downtrend
### Moving averages
##### moving averages
* SMA: arithmetic mean of prices over a given time period
* EMA: weighted and give more importance to recent prices
### Relative strength index (RSI)
##### relative strength index (RSI)
* plots the relative strength of the price compared to previous prices
* momentum indicator
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* below 30: price is relatively cheap (oversold)
* can't predict how the price will change in the future
### Average true range
##### average true range
* measure of daily price volatility
* tell us the true amount the price could move in a given day
* largest probably move for one day based on previous data
* can be used to set our stop loss and give the trade some breathing room
<br>
----
---
## How to trade with trends
### how to trade with trends
1. Identify the market trends
2. Ask where are the main areas of trade
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- is the candlestick telling us that the trade will go in the direction of our trade?
- is the trade bullish or bearish based of candlestick patterns?
### Trading tools:
* [Tradingview](https://www.tradingview.com/)
* [Tokenmetrics](https://tokenmetrics.com/)
<br>
---
### resources
* [tradingview](https://www.tradingview.com/)
* [tokenmetrics](https://tokenmetrics.com/)