Getting into the right time to trade is one of the main problems with traders. Having precise entry and exit points in trading is necessary; this is where the crypto charts come in. Even if you have the right trading strategy and a great idea about how the cryptocurrencies are going to go up or down, if the timing is not right you are going to end up losing money. Developing the skills about how to read crypto charts is very important, and this will help you to track the development of your preferred coin and it will also tell you about the latest trend where the market is heading. In this guide, we offer you a few fundamentals about how to read crypto charts that are useful for trading.
What are Crypto Charts?
Crypto charts indicate the position of cryptocurrency in the market. It also shows the point where profit and loss occur and can be used for forecasting the cryptocurrency position and value for the future. This will be helpful when a trader times the trade. The chart displays cost, quality, and volume, where cost denotes the changes in the price of the cryptocurrency over some time. The volume shows the number of units of the cryptocurrency that had been traded.
Types of Charts
Let’s dive into few important types of charts and how to analyze them –
- Line Chart
Line charts are simple charts that provide an overall representation of the asset’s price and its history, through a series of lines that indicates the present price movements. The X-axis displays the time and the Y-axis represents the price. The steeper the line goes, the stronger will be the price.
- Candlestick Chart
Candlestick charts originated from Japan and it gets its name from the shape of the candle. This candle shape indicates the movements of price; these charts offer more information than line charts, but it is a bit complicated to read. This chart is based on the time frame selected and if the user selects a daily time frame, then the candlestick chart displays information about each day. If the candlestick is green, it represents that the price has gone up and if it is red the price has gone down.
- Support Chart
The support chart indicates whether the market is either bullish or bearish. The support lines connect all the points when the price has gone up; it also indicates the buyers who are interested in buying at that particular price and have capitalized on it. This might be because the market is driven by low prices and interested buyers.
- Resistance Chart
Just like a support line chart, resistance line charts work the same way but specify the price when the bull market might take a turn. This chart is used for forecasting when the subsequent bull market will come to an end, and it helps traders to take action accordingly.
How to Read Crypto Charts?
- If you want to trade with cryptocurrencies, you must learn how to read and analyze the crypto charts. Any user who is into trading needs to have fundamental knowledge and the ability to analyze technical charts.
- Irrespective of any crypto exchange, the crypto chart displays various trends and outlines helps the user to decide which way the market is moving. These charts mainly denote two important aspects, volume, and cost.
- In the crypto chart, cost denotes the changes in the price of the cryptocurrency over the long term. The volume represents the number of units of a specific cryptocurrency that has been exchanged. Crypto charts offer valuable insights into where the markets are heading.
To conclude, crypto charts help investors and traders to decide about what will be the right time to invest in cryptocurrencies. Moreover, with the help of crypto charts, you can follow the market trends of your preferred cryptocurrency. The user needs to analyze different types of technical charts at a time, look whether the market is bullish or bearish, where the market is heading, and forecast different price movements at different points. Hence you need to study the crypto charts very carefully to avoid loss when trading with cryptocurrencies.