An in-depth understanding of reading crypto charts is important as it helps traders make better decisions. Therefore, every crypto investor should learn how to develop chart reading skills. Learning crypto charts can be tricky, but once you get the hang of the basics, you can practice and master the art of prediction. Without crypto charts, following the trends and anticipating the outcome can be difficult. But, once you know what dips and spikes tell about the market condition, you can confidently invest your money.
What is Crypto Charts?
In simple words, a crypto chart helps traders understand the crypto position in the market. It indicates the profit and loss ratio in real-time. These charts help to predict crypto position and value in the future. Whether you are reading the digital money adversities or security exchange, the chart helps you to understand the exchanging movement. The chart normally displays two qualities volume and cost. The cost shows the change in expense, while volume shows the number of exchanged units of crypto coins.
Method for Reading Crypto Charts
The cryptocurrency market is consistently fluctuating over time. That is when investors use a candle chart to evaluate different variables and understand the trend. Once you get the hand of the basics, reading the candle chart would be easy. There are many colored bars on the table, which represent price fluctuation. Using these bars, you can pinpoint the decline and growth and visualize the trends that emerge.
1. Time Selection
When you read charts, you can switch between time frames and understand the market shift. Various timeframes are starting from 5 minutes to months.
The volume indicates the amount of cryptocurrency traded in a selected time. The green volume represents the interest growth, while the red bar displays a decreasing interest rate.
3. Bearish and Bullish Indicators
There are two varieties of candles, bearish and bullish:
- Green candles show a rise in the price at a certain time frame. The candle’s bottom is the opening price, while the top is the closing price. When the market closes at a higher price than the price at which it opened previously.
- The bearish indicate the decrease, wherein the candle’s bottom is the closing price and the top is the opening price. It occurs when the market closed significantly lower than the price at which it initiated.
Here are some bullish and bearing reversal patterns:
- Hammer(Bullish reversal pattern)
- Morning Star(Bullish engulfing pattern)
- Shooting Star (Bearish reversal pattern)
- Evening Star (Bearish engulfing pattern)
Keep in mind that while predicting the market fluctuation, even a top analyst may fail. Since there are so many factors influencing the market, identifying the trends may not work all the time. But, investment with a crypto chart can be rewarding at most times. Furthermore, understanding the crypto charts is an art mastering it can create robust investment strategies.