01 /
What technical analysis is, and what it cannot do for you
The CMT Association, which awards the Chartered Market Technician designation, defines it as a methodology that evaluates markets by analyzing statistical patterns in market data (price movement, volume and momentum) to help forecast potential market behavior. Hold on to the word “potential”. Nobody serious will sell you anything stronger.
The idea is more than a century old: Charles Dow was already publishing his conclusions about the stock market in editorials for The Wall Street Journal in the late 1800s. Everything rests on three premises: price discounts everything, prices move in trends, and history tends to repeat itself, because the psychology of the people buying and selling repeats itself.
Now the limits, which almost nobody mentions. Part of technical analysis works because many people watch the same things: if thousands of traders have orders sitting at the 200-day average or at a round number, that area matters because they are watching it, not because of magic. The effect also runs the other way: economist Burton Malkiel argues that once a market regularity becomes widely known, people act in ways that stop it from happening. And the efficient-market hypothesis, set out by Eugene Fama in 1970, says past prices cannot be used to beat the market.
What about the data? An academic review published in 2007 in the Journal of Economic Surveys found that, of 95 modern studies, 56 reported positive results for technical analysis, though with serious problems such as data snooping: testing rules until one “works” by pure chance. In plain words: there is some evidence it adds something, but no guarantee, least of all in a market that trades around the clock with leverage everywhere.
02 /
Japanese candlesticks: what each candle tells you
Each candle sums up one period (an hour, a day, a week) with four numbers: open, high, low and close, the famous OHLC. The body runs from the open to the close, and the wicks show how far price traveled before being rejected. Green if it closed above where it opened, red if it closed below. A long wick is a fight one side lost, and that usually says more than the color.
The official story credits Munehisa Homma, an 18th-century Japanese rice trader. But Steve Nison, who introduced candlesticks to the West with his 1991 book, later wrote that they most likely appeared in the Meiji period, in the late 1800s. A minor detail, and a useful vaccine: trading is full of legends nobody bothers to check.
In the candlestick video I walk you through the exact anatomy of a candle (open, close, highs and lows) and the three candlestick patterns I use to anticipate whether price wants to go up or down, without the usual boring theory.
Two rules that save a lot of grief. First: a candle does not exist until it closes; a beautiful hammer halfway through the session can end up as a red candle with no wick. Second: the higher the timeframe, the more the signal weighs. A weekly doji at major resistance says far more than ten five-minute dojis.
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Support, resistance, trends and timeframes
Support is an area where enough demand showed up before to stop declines; resistance, where enough supply showed up to stop rallies. An area, not a line: price does not respect a number to the dollar, it respects a zone. When resistance breaks cleanly, it often turns into support, the so-called polarity switch. There is some empirical backing: a New York Fed paper (Osler, 2000) found that support and resistance levels published by several firms helped predict intraday trend interruptions in currencies, although results varied.
Trend lines connect rising lows (uptrend) or falling highs (downtrend). Two touches give you a hypothesis; three, a line the market is respecting. Watch out for a classic mistake: losing a trend line does not mean the trend has turned. An uptrend is alive as long as it keeps making higher highs and higher lows; when it loses the last relevant low, that is when you rethink the scenario.
Timeframe changes everything. The same Bitcoin can be bearish on the 15-minute chart and perfectly bullish on the weekly. As I explain in the trading versus investing video, the higher the timeframe, the more reliable the signal. That is why several of my analyses revolve around the weekly close: it is the candle that stays written and the one most people watch. “ESTE CIERRE SEMANAL DE BTC ES MUY PELIGROSO…”, from December 2025, is a live example: price could not reclaim its trendline, and in the video I go through the levels it had to win back and what would invalidate the bearish scenario.
Volume works as a lie detector. A breakout on volume well above average is more credible than one that happens at dawn on a Sunday with the market asleep, and in Thomas Bulkowski's pattern statistics, high-volume breakouts perform better. One very crypto nuance: the volume you see is usually that specific exchange's volume, not the whole market's, so always compare within the same source.
- Draw zones where price turned several times, not every small bounce.
- A breakout counts when it closes on the other side, not when a wick pokes through for a moment.
- If price retests the broken level and holds, the breakout gains credibility.
04 /
The chart patterns that show up most in my analyses
If you follow my channel, these names will sound familiar: the December 2025 double bottom, the wedge Bitcoin broke that same month, the February 2026 symmetrical triangle and the rising wedge that made me distrust the rally in April. Here is how to read them without cheating at solitaire.
Head and shoulders and the inverse version
Three peaks, the middle one highest (the head), and a neckline joining the lows in between. It is a reversal pattern: at a top it signals a possible turn to bearish; inverted, at a bottom, a turn to bullish. Until price closes beyond the neckline there is no pattern, only a drawing. The classic target measures the distance from the head to the neckline and projects it from the breakout, and price often comes back to touch the neckline before moving on.
Falling wedge and rising wedge
Two converging lines that slope the same way, with volume fading. In a falling wedge both lines point down, the upper one steeper, and it usually breaks upward: 68 % of the time in Bulkowski's statistics. But Bulkowski himself calls it a poor performer among bullish patterns, with plenty of failed breakouts, and its reference target is modest: the high where the wedge started. The rising wedge is its mirror image: two lines climbing and narrowing. According to Bulkowski's rising wedge statistics, it breaks down 60 % of the time, and in bull markets those downward breakouts rank dead last in his table: in 51 % of cases price does not even fall 5 % before turning. Both confirm the same way, with a close outside the line, not with a wick.
In December 2025 I analyzed how Bitcoin broke and confirmed a bearish wedge, with the main trend still pointing down and the first indecision candles showing up. In April 2026 it was the other way round: a rising wedge on the weekly chart made me suspicious of the rally and convinced me it was too early to declare victory.
Double top and double bottom
Two highs at a similar level separated by a valley (double top), or two lows separated by a peak (double bottom). It confirms with a close below the valley, or above the middle peak, which acts as the neckline. If the two touches are very close in time, it is usually just consolidation. In a double bottom you want to see more volume on the rally than on the second low.
Symmetrical triangle
Lower highs and higher lows: the market compresses because nobody is in charge. In Bulkowski's symmetrical triangle statistics, the breakout arrives on average 74 % of the way to the apex and is upward 60 % of the time, but only 58 % of upward breakouts reach the measured target (36 % of downward ones). In other words: the target is a reference, not an appointment.
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RSI and divergences: beyond 70/30
The relative strength index (RSI) was created by J. Welles Wilder and published in June 1978, in Commodities magazine and in his book New Concepts in Technical Trading Systems. It compares the average of up moves with the average of down moves over recent periods (the standard is 14) and maps the result onto a 0 to 100 scale. Wilder treated readings above 70 as overbought and below 30 as oversold.
The problem: in a strong trend the RSI can spend weeks above 70 while price keeps climbing, and anyone who sells every time it gets there jumps off the train too early. Analyst Andrew Cardwell observed that in uptrends the RSI tends to move between 40 and 80, and in downtrends between 20 and 60. In the tutorial I explain why 70/30 fails in strong trends and where the indicator's real power lies: divergences.
Regular and hidden divergences
- Regular bearish: price makes a higher high while the RSI makes a lower high. Momentum is fading; a warning of a pullback or reversal.
- Regular bullish: price makes a lower low while the RSI makes a higher low. Sellers are losing strength.
- Hidden bullish: price makes a higher low while the RSI makes a lower low. It appears in uptrends and points to continuation (Cardwell called it a “positive reversal”).
- Hidden bearish: price makes a lower high while the RSI makes a higher high. Typical of downtrends: the decline tends to continue.
A Cardwell nuance that saves money: bearish divergences show up mostly inside uptrends and often bring only a brief correction. When two of them chain together (three rising price highs with two falling RSI highs) people call it a double divergence, and the exhaustion warning gains weight.
Another way to use RSI is to compare it with earlier cycles. In November 2025 I analyzed how Bitcoin's RSI looked like the one from 2017, just before that year's huge run. Watch it knowing what came next: in February 2026, price touched 60,000 dollars. An analogy with the past is a hypothesis, not a calendar, and it needs an invalidation like any other pattern.
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MACD and moving averages: the trend, with a delay
The MACD was created by Gerald Appel in the late 1970s. It has three parts: the MACD line (the 12-period exponential moving average minus the 26-period one), the signal line (a 9-period exponential average of the MACD itself) and the histogram, which plots the gap between the two. When the MACD crosses above the signal, momentum turns up; when it crosses below, it turns down. Crossing the zero line means the fast average has moved above or below the slow one.
Its big limitation is built in: because it is made of moving averages, it lags price. It works well in trends; in a sideways range it throws one false cross after another. In the November 2025 MACD video I use it exactly that way, to speculate with scenarios: what could happen if it confirms the move and what if it gets invalidated.
The 50 and 200-day simple moving averages are the most popular trend filter. A golden cross happens when the 50 crosses above the 200; a death cross, when it crosses below. They look dramatic in headlines, but they arrive late by definition. Use them as context (is price above or below the 200-day average?) rather than as a buy button.
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Bitcoin dominance and TOTAL3: where the money is going
Bitcoin dominance (BTC.D) is the share of the total crypto market cap that Bitcoin represents. It sounds simple and it has a catch: every data provider computes the total differently. TradingView, for example, uses the 125 largest cryptocurrencies, while other aggregators add up thousands. That is why you will see different numbers on the same day. Always compare within the same source.
TOTAL3 is the market cap of the whole market minus Bitcoin and Ethereum (on TradingView, also built from the top 125). If TOTAL3 rises while BTC dominance falls, money is rotating into altcoins, the classic fingerprint of an altseason. But careful: the total includes stablecoins. If everything drops at once and money parks in USDT, Bitcoin dominance can fall without a single altcoin gaining anything. These rotation cycles have a lot to do with the halving calendar, covered in the cycles and halving guide.
In “¿Bitcoin o Altcoins? El gráfico que lo cambia TODO” I cross-check Total3, dominance and the Russell 2000 index of US small caps to see whether altcoin season has real support or is just wishful thinking.
08 /
How to build a scenario plan like the ones in my videos
Notice that my analyses almost never say “it is going up”. They say “if this happens, I look for that; if it loses this level, the scenario is off”. In the description of a December 2025 analysis I put it in writing: “this is not a video of certainties, it is a video of probabilities” (translated from Spanish). And this is how the description of the February 2026 triangle video put it:
Bullish scenario: a strong breakout and a possible move toward the 80,000$ zone. Bearish scenario: loss of structure and a return to the 58,000$ zone.
That format forces you to decide before price starts rushing you. You can build it in six steps:
- 01
Start with the higher timeframe
Weekly and daily. Uptrend, downtrend or range? Everything else is read inside that context.
- 02
Mark two or three zones, not twenty
The levels where price reacted strongly. If your chart looks like a barcode, you have drawn too much.
- 03
Identify the structure
Is there a pattern or a clear trend line? Write down which line confirms it.
- 04
Define the trigger
What has to happen before you act: for example, a daily close above resistance on above-average volume.
- 05
Write the invalidation before you enter
The price that proves you wrong. Your stop goes there, and position size is set so that hitting it costs little; many traders risk 1 or 2 % of their capital per trade.
- 06
Review at the close, not every tick
Decide on the closed candle of your timeframe. Checking the one-minute chart every five minutes is the fast track to trading on anxiety.
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Mistakes that get expensive
- Entering before confirmation. A head and shoulders without a neckline break is not a head and shoulders.
- Trading the one-minute chart without checking the daily. Lower-timeframe noise looks like a signal until it liquidates you.
- Stacking indicators that say the same thing. RSI, stochastics and MACD all come from the same price: three green oscillators are not three confirmations.
- Selling just because the RSI hits 70. In a strong trend, overbought can last for weeks.
- Moving your stop as price gets close. If the invalidation was right when you entered, it still is.
- Seeing what you want to see. If you keep drawing lines until the chart agrees with you, you are no longer analyzing: you are asking for permission.
- Using leverage to speed things up. If you trade from Spain or anywhere else in the EU, ESMA's 2018 restrictions on CFDs cited data showing 74 % to 89 % of retail accounts lost money, and capped leverage on crypto CFDs at 2:1 for retail clients.
And the underlying mistake: confusing trading with investing. Technical analysis helps you pick better zones and manage risk, but it does not turn a bet into a plan. In “Trading vs Invertir en Bitcoin” I compare the pros and cons of each path, why most traders lose money and what I do with my own money.
Chapters (7)
To keep practicing, the trading videos cover strategies and indicators, and the Bitcoin analysis section collects my scenarios video by video. If a term trips you up, it is in the glossary, and if you are brand new, start with how to start in crypto. Read the risk warning too: this is not financial advice; always do your own research.
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