So, you’ve started investing in cryptos, and have you felt outdated about the market trends? Tried reading crypto charts but failed every time? If you’re just entering the world of cryptocurrencies and started trading, A crypto chart may seem all greek and Latin to you. But at the end of this quick guide article, you can read those difficult charts like a pro!
Cryptocurrencies are indeed highly volatile. That is, their prices in the market keep fluctuating. Nobody knows what will be the fate of the value figures in the future!
But a crypto chart is a graphical representation of the notable and current price action of crypto taking place across a particular time frame. So, knowing to read a crypto chart can help you make the right investment with cryptos. This will indeed protect your savings and put you in a safer zone.
Finding it easy to reading crypto charts is no joke. You need to know a few theories and terms. And we’re going to put down these terms as simple and easy to understand. So hold on and keep reading!
A deeper insight into Crypto charts and their types
Reading crypto charts is an ideal way to have a technical analysis of the market’s price trends of a cryptocurrency. When it comes to price figures, two types of analysis can be done. They are fundamental and technical analyses.
The fundamental analysis more or less deals with the accurate value of a stock or cryptocurrency. On the flip side, technical analysis can help in figuring out the right time to enter or exit the market.
Imagine a situation where you’re planning to invest in, say, Bitcoin. But since you’re just starting to trade, having done a technical analysis will let you know the best time you can enter the market and make your first move!
So, crypto charts deal with the technical analysis part of cryptos. It compares the price ranges and gives a perception for traders new to the market. They are even helpful for traders who are already in the market to stay updated with the current trends.
Also Check XRP Price Prediction and the Price Forecast Chart to predict your price.
Knowing the types of crypto charts
The different types of crypto charts are,
Let’s see more about each one of them.
- Line charts
The line charts are one of the most basic types. These are very much similar to the typical line graphs you would’ve come across. A line chart simply has two axes, the X and Y. A line is drawn corresponding to these axes and it usually represents the price changes of cryptos that have
The price that gets plotted on the line chart is the closing price of each day. That is the accurate price figure that crypto has at the end of a business day.
These charts have the coin value, usually in dollars on the Y-axis which is the vertical line. On the horizontal X-axis, you can see the time slot.
2. Candlestick chart
The candlestick chart is the most popular chart type used for tracking price trends in the cryptocurrency market. You can see that the candlestick chart consists of various candle-like diagrams. This chart can be made for different time frames. They are
- 15-minute chart
For instance, a 15-minute chart may show the price trend going up or down of crypto in a set of fifteen minutes.
Let’s now see more about the candlestick chart.
When you look at a candlestick chart, you will find candles of two different colors. They are green and red.
The green candlestick is called the Bullish candle and represents an increase in the price of the cryptocurrency. That is if you find a green candlestick on a chart, it means that there is some increase in price value.
On the other hand, the red candlestick is called the Bearish candle and represents that there is a decrease in the price value of a particular cryptocurrency in a period.
The rectangular part of these candles is called the Real body and represents the value of price increase or decrease.
Apart from the real body, you can find the top and the bottom parts of the rectangle. They represent certain values but are different for the bullish and bearish candlesticks.
In the case of the Bullish candle, the bottom part indicates the opening price and the top indicates the closing price of specific crypto in the given period. Whereas, it is the opposite of a bearish candle. That is the top line represents the opening price and the bottom the closing price.
You should make sure that you’re clear with the sides of the opening and closing prices, as it is important while you read a crypto chart.
As already said, crypto charts represent a historic and the current market value of the crypto. So, you can see a line, called a Shadow or Wick. These lines show the highest market price during the particular period.
You will also find some wicks without a candlestick. These are called the Dogi candles and occur for both bearish and bullish types. A Doji candle shows that there was not much of a price change over the said period.
A candlestick chart will let you find the price trends of the particular period. For instance, you pick the 15-minute time frame, and you can enter the time you need to check for. You can find the price change from 5.00 to 5.15 pm on the crypto chart.
3. Bar chart
A bar chart is usually used to represent the price trends comparison of a particular time frame especially depicting a yearly trend.
Just like line charts, bar charts also have two axes. The X and Y axes. The X-axis stands for time, the Y-axis denotes the price figure.
On a bar chart, you can see the various data like opening and closing prices. Also, it denotes the highest and lowest price trends for the time frame. But when you take a closer look, you can see the ranges being mentioned. A range is a difference between the highest and the lowest price.
Similar to the candlestick charts, you can find two colored bars on a bar chart. When the crypto closes at a higher rate it is represented as a green bar. On the other side, the red bars represent that there was a decrease in the closing price.
Bar charts are also flexible and can be read for different time frames like daily, hourly, and so on.
Knowing the basics of reading crypto charts is highly essential for new as well as dedicated traders in the market. It is because they can arrive at a prediction about the future trends of the market value.
In times where cryptocurrencies are highly volatile in their price figures, having a check on the opening and closing prices of crypto say Ethereum, you will be able to arrive at a decision whether it is the right time for you to make an investment move or not.
Also, reading the highest and lowest closing prices of cryptocurrencies can help you to decide on the right currency that you will need to invest in. Thus, the art of learning of reading crypto charts can be highly beneficial in your crypto journey!