If you want to engage in trading, learning how to study cryptocurrency charts is an important skill. You must have that technical analysis skills and all focus that will always go along. It’s never going to be easy at first; it’s very overwhelming, which is why it takes quite a while before someone could truly read and understand the cryptocurrency chart.
However, developing the right skill in studying cryptocurrency charts would be considered an art to others. This kind of skill will help you monitor the price of your favorite coin. This is why I have provided this useful guide in this article to make your trading journey a lot easier. Check out this useful guide towards learning how to study cryptocurrency charts.
How Does Cryptocurrency Charts Work?
You understand how overwhelming cryptocurrency is, most especially when you’re just starting. You will encounter too many figures, lines, and buzzwords, especially when you’re looking at the charts. Cryptocurrency charts work as a tool that will demonstrate many relevant data. It also helps you appreciate the price movements in cryptocurrency.
You will see how the data is being plotted to see the market’s movement patterns to identify the recent trends. The charts will show you the system and let you picture the market’s overall movements, whether people will buy, and if the price is getting high, or if the people will sell when the price is dropping.
The main point is that cryptocurrency charts will help you predict the market’s state and what the price will be in the future. You will find out what the price will be in the future and know when is the best time to sell, buy, or HODL.
Understanding and Studying Different Cryptocurrency Charts
Learning how to study cryptocurrency charts will always give you a more objective view of the price. To help you understand more about crypto charts, here are key elements you should know to help you trade smoothly, especially if you’re dealing with different types of charts:
When you’re facing a Bitcoin chart, you will find it on the left-hand side of the chart. You will see that it has an axis for Bitcoin’s market cap, shown with a blue line. It refers to the Bitcoin’s value that is being issued. To understand more, you can see a black line at the bottom of the chart representing historical trading volumes of about 24h.
This is a very useful indicator of whether a flow outbreak is built on weaker foundations. This means that the price will more likely collapse right away. Remember that the higher the volume increases, the more chances of having an original price increase.
Linear Line Chart
One of the basic types of a crypto chart is the Linear Line Chart. It shows the price points and, in the chart, there is a green line located on the upper part. It applies highly to the right-side scale, representing the Bitcoin price in USD even if it can only show a local currency.
Candlestick Chart is the most common and known charts out there. If you happen to visit an exchange’s website, then there’s a big chance that you’ve encountered the Candlestick Chart before. When you’re facing this kind of chart, you will notice a red and green candle. Every candle comes with shadows that are sticking out of it. It will show you the significant differences between the closing and the opening price.
The candlesticks’ importance is that it will show you exactly where the market is turning, as it helps you know a lot of patterns to help you predict how well the market will act. Some shadows will show you how high or low the opening and closing prices have gone. The green candle usually shows the upper shadow, which happens to be the close price. On the other hand, the lower shadow will show the red candle’s open price.
Analysis Tools of Cryptocurrency
If you want to learn more about how to study cryptocurrency charts, you should also know the analysis tools. Here are the important tools you must understand and know.
TradingView is one of the best cryptocurrency analysis tools to use. This platform has many capabilities and the best features to make your trading become very easy and run smoothly. In other words, this tool is ideal and very easy to set up. It’s very rich in resources, and there are many instruments you can always follow.
Money Flow Indicator
One of the best volume indicators is the Money Flow Indicator, and there is a great reason it’s known and familiar to many. It’s better than the classics because it measures an institutional accumulation-distribution. It naturally shows the traders that are buying and selling.
This tool is very useful as it can be sued to spot opportunities like reversal trades. You’re only looking as to when to use the Fibonacci extension levels, where the first is a trend, and the other one is a correction where there are three swing points of reference.
Understanding and learning how to study cryptocurrency charts is a skill you need to strive in today’s trend in the cryptocurrency market. While the crypto tools can be your important weapon in trading, you still need to apply these tools in the right manner to gain benefits from them. Among the Charts mentioned, perhaps the crypto candle charts will help you better in the market, so you may use them as your complementary tool when you trade.
Remember that you need to understand the concepts and be familiar with the different charts, requiring technical analysis. I highly recommend that you improve your learning and use the tools in building strategies for your needs. I hope you understand how to study cryptocurrency charts with the guidelines mentioned. To know more about cryptocurrency, find out here!