How to Read Cryptocurrency Charts Like a Pro

The volatile nature of the crypto market might be one of the biggest risks for any investor or trader. You can have a crypto asset in your wallet that is trading at all-time highs one day and surprisingly, it may lose value the next day. If you don’t know how to read crypto charts, then it will be extremely difficult for you to navigate the wild west of cryptocurrencies. Staying updated with price movements in the crypto market is the only way to make smarter trading decisions.

Irrespective of your skill level as a crypto trader, reading crypto charts is something that you cannot ignore. You should also remember that chart patterns or technical indicators are not the only things you should trust while making crypto trading decisions. However, that does not affect the importance of cryptocurrency charts for traders. A simple guide on reading crypto charts easily will make crypto trading more accessible to everyone.    

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Understanding the “What” and “Why” of Crypto Trading Charts

Almost everyone in the cryptocurrency space wants to know the best practices for reading crypto charts. Before you search for “how to read cryptocurrency charts”, you should know “what” they are and “why” they are important. Cryptocurrency charts offer visual representation of the price movements of crypto assets for a specific period of time. You can use these charts to understand market trends and check whether the price of cryptocurrencies is increasing, decreasing, or staying the same.

You will find crypto charts on almost every trading platform, which help in tracking asset performance or making price predictions. The charts also serve as useful tools for analyzing entry and exit points. Crypto trading charts display data on the basis of historical prices and volumes, which you can adjust to measure price changes expected in the next few minutes, hours or weeks. 

Anyone interested in cryptocurrency trading must also know the reasons for which reading crypto charts is an invaluable skill.

• Becoming a Smarter Crypto Trader

The foremost benefit of cryptocurrency charts is evident in how they show the history of the crypto market and where it might be headed. The skill of reading cryptocurrency chart patterns, trends and price levels helps you make decisions driven by data rather than guesses. You will develop the ability to make trading decisions on the basis of market history rather than emotions.

• Finding the Perfect Time for Trading

One of the most crucial aspects in crypto trading is the timing. The difference of one second can spell the difference between profit and loss in a trade. Traders who know how to read crypto trading charts can identify market entry and exit points. Therefore, they can buy when the prices are low and sell assets when their price is high. 

• Delivering Benefits to Every Trader

Another notable reason to trust crypto charts is the way they help both beginners and seasoned traders. As a beginner, you can use the best crypto chart indicators to learn about market movements and gain confidence. On the other hand, experienced traders can identify advanced patterns in the charts and use specialized tools to fine-tune their trading strategies.

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Identifying the Common Variants of Crypto Charts

The next prominent highlight that you should look for in a guide on cryptocurrency charts is the outline of different crypto chart variants. You will come across different types of cryptocurrency trading charts that can provide different perspectives on the crypto market. Learning about the implications of each crypto chart variant can help you find the best practices to use them effectively.

The most common crypto charts that you will find are line charts, which connect the closing prices in a line. You will not find full price action insights from line charts even though they are easy to understand and more suitable for beginners.

The list of types of crypto charts will be incomplete without mentioning the most popular choices, candlestick charts. These charts are the ideal choices for understanding the short-term price fluctuations. The ‘candles’ in candlestick charts help you check the opening and closing price for a specific time period along with the high and low values.

• Bar Charts and Heikin-Ashi Charts

You will also find modifications of candlestick charts suited for different purposes in the form of bar charts and Heikin-Ashi charts. Bar charts are exactly like candlestick charts albeit with limited visual elements. However, bar charts provide detailed information about the opening and closing prices of cryptocurrencies. 

Heikin-Ashi charts improve on candlestick charts by smoothening out price action to provide more room for identifying trends. They may not be great at showcasing exact prices but provide the best tools to identify market trends.   

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Recognizing the Key Elements in Crypto Trading Charts

Cryptocurrency trading charts are an integral component in the technical analysis of crypto assets. You can use them to learn more about price behavior, market momentum and trends for crypto assets for a specific time period. Anyone can read crypto charts effortlessly when they know how to recognize key elements in the chart.

The vertical axis in a crypto chart represents the price of a specific crypto asset. It goes through frequent updates in real-time, thereby helping traders in tracking price movements. You can rely on it to set stop-loss or take-profit levels according to historical resistance and support zones.

Crypto trading charts display price data with the help of candlesticks that showcase visualization of the price action for specific timeframe. Candlesticks are a crucial element for anyone reading cryptocurrency chart as they help in anticipating whether a trend will continue or fade away. Understanding candlestick charts is quite simple as every candlestick showcases the opening, closing, highest and lowest price of a specific crypto asset in a given period of time.

You should know that green or white candlesticks in the chart represent bullish market sentiments. The closing price in green or white candlesticks is generally larger than the opening price. On the other hand, black or red candlesticks stand for bearish market sentiments. The closing price in black and red candlesticks is generally lower than the opening price.

The horizontal axis in every crypto trading chart represents the time. You can measure the price movements for a specific period of time ranging from 1one minute to one year on a crypto chart. However, shorter timeframes are the more ideal choices for day traders while longer timeframes suit the needs of investors and swing traders.

The next important details that you will discover in guides on how to read cryptocurrency charts are the volume bars. You can find the volume bars generally at the bottom of crypto charts and they will tell the amount of the asset traded in each candle. The tall bars represent high activity while low bars indicate the opposite. Volume bars are critical elements in any crypto trading chart as they showcase the strength of price movements.

Crypto traders should also know about technical indicators or the calculations used for more objective interpretation of market data. You must learn about the different types of indicators based on momentum, volume and trends to interpret crypto charts accurately.

Final Thoughts 

The fundamental details in a cryptocurrency trading chart will help you understand how to read one. As you familiarize more with the different types of crypto charts, you will discover how to evaluate technical indicators and patterns. Learning how to study a crypto trading chart will improve your confidence and empower you to make better trading decisions. Find the best resources to discover insights on the most notable technical indicators in crypto charts now.

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!