Reading trading charts is a valuable skill.
Yes, you can read stock, forex, and crypto trading charts if you have a solid knowledge and experience reading them. This skill will help you not only track the price of your favorite asset, but also will give you a good reasoning to put your money goes up.
In the crypto world, we mostly deal with candlestick charts, since 90% good decision based on the trend of the crypto market.
How to Use Candlestick Charts
Crypto candlestick charts give you a more objective view on the cryptocurrency price versus something that’s a little bit more subjective like using your intuition.
Market timing is a typical issue many new traders have. If you want to get a correct entrance and exit stage, you ought to use cryptocurrency maps. You can have a pretty cool trading idea, and you can think the Bitcoin is about to get up, but if you pick the wrong point, you’re going to start losing money left and right.
If you leave too early or leave too late, you will still leave the money on the table. You will even that out by using crypto maps in tandem with technical analysis.
In this cryptocurrency tutorial, we’re going to cover only a few basics on how to interpret crypto-currency charts and the crypto-currency analysis method that you need to succeed in this company.
We’re also going to detail our favorite cryptocurrency research software and services for bitcoin and altcoins trading.
Main elements of the Crypto Candlestick Charts
#1 Time Period
First element: Time period.
The time period will affect the candlesticks A LOT. Different time period will calculate different amount of transactions that have taken place and would produce different candlesticks.
For example, if your favorite cryptocurrency time period is a 5-minute map, then each candle will be 5 minutes.
Obviously, the time period can be changed to make it much more flexible, or you can easily select from the regular time frames (5-minute, 15-minute, 1 hour, 4 hour, everyday, weekly, monthly).
#2 Trading Volume
Second element: Trading Volume.
The trading volume will show you how much trading action happened during the time period you picked. Read more about the volume trading approach here.
The longer the volume bar is, the more incentive there is to purchase or sell. The green volume bar would highlight the increased interest in the coin and the pressure to purchase. In the other side, the red volume bar would highlight a fall in the confidence in the coin and the pressure to sell it.
#3 Bearish vs Bullish Candlestick
See the difference between two styles of candlesticks:
By default, the bullish candlesticks are depicted by green candles, implying that the price has risen over the chosen timeframe. For eg, if the closing price of a 5 minute candle is higher than the opening price, it’s a bullish candlestick.
In the case of bullish candlesticks, the bottom of the thick segment represents the opening price, while the top of the body represents the closing price. The candlestick wicks reflect the highest and lowest prices during the chosen time span.
The candlesticks will come in various sizes and sizes. These price formations are a perfect way to forecast potential market trends. There are a lot of candlestick configurations that can tell what’s going to happen next, and we call them map trends.
Cryptocurrency Analysis Tools
Now we’re going to share the best four analysis tools for cryptocurrency research to start trading Bitcoin and other coins. This section is not only for enthusiasts in blockchain, but is also devoted to more seasoned traders.
There are several technological tools out there, and you’re definitely going to want to use a lot of them in tandem. We assume that these trading methods will help you not getting zonk and waste some of your money or make a better deal in trading/investing.
#1 Trading View
The strongest cryptocurrency research platform that we want to use is the FREE TradingView charting app. This charting tool has many strengths and secret functionality that will make your trading smooth.
It’s just a tool that’s good to have, but it’s not the end-to-be-all, since there are other resources that you can use at your disposal.
It’s very quick to set up and use a trading view. It’s rich in services, software that you can follow, and most importantly,
#2 Money Flow Predictor
The Chaikin Money Flow predictor was created by the trading guru Marc Chaikin, who has been coached by the most active institutional investors in the world.
The explanation Chaikin Money Flow is the best volume predictor and better than the conventional volume predictor is that it tests institutional accumulation-distribution. So, of course, it indicates when the institutional traders are purchasing and selling.
Usually, the Chaikin volume predictor should be above the zero line on a rally. Conversely, the Chaikin volume predictor should be below the zero line on sales.
#3 Fear and Greed Index
The crypto fear and greed index uses a bunch of details that gathers all the data together to generate a ranking and a valuation that is plotted on a graph for you.
If the sensation indicates a reading below 20, that’s intense anxiety. Typically, the price of the coin is lower which suggests a potential bullish turnaround. Conversely, a business mood over 80 indicates intense greed. In this case, the cryptocurrency is up, and the index of fear and greed indicates a potential bearish reversal. Read this Crypto Signals Guide for more detail.
Basically, we use the index of terror and greed as the opposite measure. Consumer psychology is a strong thing that moves the consumer, and when we get an intense reading of market sentiment, it’s time for us to look for a turnaround.
#4 Fibonacci Extension
The Fibonacci extension is an incredibly valuable method that can be sued to track counter-trend openings and reverse trades. We want to concentrate on the level of 1,618 or the golden ratio.
There are all sorts of rules, but essentially, there are only two things we’re looking for while using the Fibonacci extension stage. The first thing is a pattern, the second is a correction of three swing points of reference. We use these swing points to draw the Fibonacci extension stage and to find potential reversal points on the market. Learn the Fibonacci company here.
The golden ratio can be seen everywhere, it’s also the “magic number” that we can use in our trading. In one way or another, often skilled traders integrate the golden ratio into their trading so the market responds to this particular level with a high degree of precision.