Reading Crypto Charts for Successful Trading

When you first begin your crypto trading journey, holding onto your cryptocurrency might seem like the best strategy to turn a profit. Many people jump into the crypto trading game without enough information or knowledge about it, and they end up with losses that they can’t really recover from.

In order to successfully trade crypto, it’s important to learn more about crypto charting and how to properly read cryptocurrency charts. Here is everything you should know about crypto charting and how to translate the data into usable information and knowledge:

How to read crypto charts

Cryptocurrency charts are a series of candlestick patterns and lines that display the historic cryptocurrency price performance. These charts can help you predict upcoming changes in market conditions and trends, which allows you to improve your crypto investment decisions. Crypto charts can seem very complex, but you can easily understand the different components of a crypto chart. Here is some of the information you can get through a chart:

• In the upper lefthand corner, known as the Time Frame Selection, you can select a crypto chart based on particular periods of time. These time periods can vary from a year or more to daily charts. You can also select custom dates in the upper-righthand corner for specific timeframes.
• The left vertical axis symbolizes the coin’s market cap, usually in billions of dollars.
• The right vertical axis symbolizes the price of bitcoins or BTC in US dollars.
• The grey bars on the bottom of the crypto chart symbolize the trading volume of bitcoin. Each of the bars indicates the number of bitcoins exchanged within a 24-hour time period.
• The tooltip will indicate the 24-hour volume, the market cap, and the price when hovering over the trendline.
• At the bottom of the chart, you can see an all-time and simplified historical view of the price of the asset, which allows investors to cross-compare historical data on various timeframes.

Price indicators in crypto charts

Here are some price indicators that you should understand:

• Relative strength index. The relative strength index, also known as RSI, is a momentum indicator that helps traders determine the strength of the market. It helps measure the magnitude of recent price changes to analyze the oversold or overbought conditions in the asset’s price. The RSI usually shows up as a line graph under the main chart and moves between the two extremes of 0 and 100. An asset is considered oversold when the RSI is below 30 and overbought when it is above 70.
• Simple moving average. The simple moving average, also known as SMA, helps to predict uptrend and downtrend trend reversals. The price indicator calculates the average of the selected range of closing prices by the number of periods throughout that range. The simple moving average is a lagging indicator, so the longer the time period, the greater the lag. Combining the simple moving average with the relative strength index can help you find stronger signals.