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how to read crypto charts

Decentralised exchanges (DEX) offer the same services but have non-custodial peer-to-peer marketplaces without an intermediatory for facilitating transactions and custody of funds. Instead, trading is executed through what are known as smart contracts. If you are new to cryptocurrency trading, perhaps you’re confused about the jargon. I’ve been in your shoes (many times) and know how demoralising it is when you just cannot seem to get the right side of crypto trading profits. Seamlessly switch between TradingView charts and’s proprietary charts, while also accessing historical data, top NFT collections, and more. Meanwhile, a bearish head and shoulders pattern, like the one shaded in red on the right, may precede a price downtrend.

how to read crypto charts

Other candlestick patterns can be used to confirm the current trajectory of an asset’s price. These are called continuation candlestick patterns, and detecting these patterns can help traders consider whether or not they should stay the course with their investments. A candlestick shows the change in the price of an asset over a period of time. As the basic indicator in a crypto chart, each candlestick represents a specific price movement, including the opening and closing prices, as well as the highest and lowest price points.

Tips for Successful Crypto Trading

A bearish candlestick indicates selling pressure during the time increment. The first thing you should do is to understand the time period represented by each of those candles. Many traders prefer the use of candlestick charts over line charts, as they show a more detailed picture of an asset’s recent and past price movements. With each candlestick showing the opening, closing, high, and low prices, a group of these candlesticks provides more insights into price activity. Candlestick charts provide visual representations of price movements and patterns, helping traders to identify trends, support and resistance levels, and potential entry or exit points.

how to read crypto charts

Please note that the availability of the products and services on the App is subject to jurisdictional limitations. may not offer certain products, features and/or services on the App in certain jurisdictions due to potential or actual regulatory restrictions. The purpose of this website is solely to display information regarding the products and services available on the App.

It is not intended to offer access to any of such products and services. You may obtain access to such products and services on the App. Before accessing the Exchange, please refer to the following link and ensure that you are not in any geo-restricted jurisdictions. When the line for the faster moving average and the line for the slower moving average come together, that’s called convergence. When the faster moving average line is moving away from the slower one, that’s called divergence.

How to Read Crypto Charts — A Beginner’s Guide

One such arrangement is called ‘head and shoulders’, which is characterised by three peaks or valleys that show up next to each other. In this pattern, the second peak or valley looks like a ‘head’ that overshadows its neighbours on both sides (the ‘shoulders’), giving this pattern its moniker. Some of these indicators are basic pattern assessments of a combination of candles, while others are more sophisticated trendlines and metrics based on recent price movements. Conversely, the bullish evening star shows a possible trend reversal from bearish to bullish. This pattern forms when a sharp drop in price is followed by a consolidation period and then a sharp incline.

  1. Traders often rely on market sentiment, tokenomics, project developments, technical analysis and crypto community discussions to assess their value.
  2. Cryptocurrency trading is a global market operating 24/7, even during holidays and weekends.
  3. A resistance line is drawn through several points where the price peaks, buyers stop buying, and sellers jump in, driving the price down.

Fundamental analysis might seem time-consuming, but it can make a tremendous difference as part of your trading plan. Although this chart software has an excellent range of trading tools, I didn’t get along with it. Charting on the mobile is tricky and caused me to have more losses. CEX is an abbreviation for “Centralised Exchange”, meaning that the exchange facilitates trading activities as a central intermediary.

Market Capitalization

So, if traders think your coin is a bargain at $100 they leap to purchase it when it hits that price and it isn’t likely to go much below there. If they think $150 for your coin is overvalued or even just a nice profit, many will sell at that point and the price won’t go much higher. And I’m sure you can already see many of the ways that they apply to crypto markets.

Similar to ‘head and shoulders’, users can also see ‘wedges’ as patterns in crypto charts that involve a wider point of view. Wedges can be traced in a crypto chart by drawing a line that connects the lower points of price movement over a period of time to another line for the price peaks. When those two lines approach each other from left to right, it is called a wedge. One of the best ways to track the market is using a crypto candlestick chart. The insight this chart provides can be valuable in any market – and crypto is no exception. But with so much data packed in, these charts can be intimidating.

Bearish and Bullish Engulfing Patterns

For example, if there is positive news about crypto, then it’s likely that the crypto prices will rise. However, if there is negative news about crypto, then it’s likely that the crypto prices will fall. This is the amount of crypto traded over time and can be used to identify trends in the crypto markets. If the volume is consistently high, then it’s likely that there is a lot of interest in crypto. However, if the volume is low, then it’s likely that the crypto is not being actively traded. My Favourite charting platform for trading cryptocurrencies is TradingView.

This candlestick has a short body situated near the bottom and a long wick that extends upwards. It indicates that an asset’s price slightly decreased by the end of the trading period, even after reaching higher prices along the way, which explains its red colour. Candlestick patterns are generally categorised into bullish and bearish patterns. A bullish pattern generally indicates future positive price movement for an asset, which may incite a trader to buy in anticipation that the token will increase in value. The inverse happens with a bearish pattern, which may incite some traders to sell before the potential downwards price movement.

It’s followed by a bullish green candle that opens below the previous candle’s low and closes above the midpoint of the first candlestick’s body. This pattern suggests that the bulls might be in charge of the market, hence leading to more drawdown prices. The piercing line pattern is the direct opposite of the dark cloud pattern, despite its unique name. As you could imagine, this pattern signals a possible trend reversal from bearish to bullish. The first candlestick is a bearish candle, followed by a larger bullish candlestick that “engulfs” the previous candle’s body.

It’s important to consider other technical indicators and factors in conjunction with candlestick patterns for comprehensive market analysis. We discussed the different types of technical indicators, so let’s look at how to find trendlines, support and resistance and historical patterns on the charts. By zooming out of individual candlesticks to see the general crypto charts, users can unearth even more patterns.

He used a system of bars to represent the price movement over a given time period, with the length of the bar indicating the price range over that period. Aside from single-candlestick patterns, there are other candlestick combinations that you can use to project possible price movements. For our first example of a bearish candlestick pattern, let’s recall the hammer.

April 13th, 2021

Posted In: Cryptocurrency service

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