Beginners Guide to Read Crypto Charts

If you’ve invested in cryptocurrencies or are thinking of buying cryptocurrencies, you’ve covered the first step in crypto trading. To maximise returns, the next steps are to build a crypto portfolio and track your investments.

Here’s where crypto charts play an integral role.

Analysing crypto charts is a technical skill that can help investors stay objective and track the progress of their investments. It can also help in making sound investment decisions based on trends and technical analysis.

What are the essentials of reading Crypto Charts?

Technical Analysis follows these fundamentals of The Dow Theory:

1. Elements like existing, prior, and upcoming details of an asset are integrated into the current prices of an asset. Therefore, instead of focusing on every single element that affects the rise and fall of the price of a coin, investors can focus on the price alone.
   In cryptocurrency trading, elements like current, prior, and upcoming demand, regulations, etc., are details that affect the price of a cryptocurrency.
2. Price movements are never random. They follow trends that can be short-term or long-term. Charts help in visualising these trends.

Understanding the six tenets of Dow Theory can help you form your strategy after reading the crypto charts.

How to read a crypto chart?

The Japanese Candlestick Chart is an extremely popular crypto chart. You can see the price fluctuations of a cryptocurrency over a period using these charts. The red represents dips in price, and the green indicates an increase in the price.

Choosing the period over which you will analyse the cryptocurrency’s price fluctuations is crucial for the strategy you wish to adopt. Analysing one month’s movement can help you observe long-term cryptocurrency trends, whereas daily, hour-to-hour or even 5-minute crypto charts can help with short-term movement.

These crypto charts also display the volume of trades. Increasing trade volumes can impact the price fluctuations of a cryptocurrency. A longer volume bar indicates higher buying or selling pressure. Red and green bars can help you observe a decrease or increase in the interest in the cryptocurrency, respectively.

These charts form patterns that can indicate current and prior trends of the cryptocurrency based on which you can infer future projections.

What are some of the common patterns formed on the crypto charts?

1. The Bullish and Bearish Candlestick

A candlestick stick sometimes creates a pattern of a box-and-whisker (rectangular formations) chart. They form straight lines in green and red, indicating the opening and closing price reached during a time interval.

A bullish candlestick, indicated by green candles (rectangular formations in the chart), are formed when the opening price is lower than the closing price. This occurs in the event of a price rise during the set time interval. In mid-October of 2021, Bitcoin witnessed a rapid gain. BTC to INR saw a bullish candlestick when it rose from 42,98,151 to 46,25,460 between Oct 14 to Oct 15.

A bearish candlestick, indicated by red candles (rectangular formations in the chart), are formed when the opening price is higher than the closing price. This occurs in the event of a price dip during the set time interval. ETH to INR witnessed a bearish candlestick when it dropped from 268,545 to 257,066 between Oct 09 to Oct 10.

2. Support and Resistance

Support level in a crypto chart is the price level beyond which the cryptocurrency does not fall for a fixed period. This is observed when the buyers outnumber the sellers, thus controlling the price dip.

The resistance level in a crypto chart is the highest price level beyond which the cryptocurrency does not increase for a fixed period. This usually occurs when the sellers are more than the buyers, thus controlling the price rise.

Seasoned investors also track the wedges, shooting star candle patterns, and other patterns to arrive at key decisions leveraging the technical analysis while indulging in crypto investments.

Stay tuned to Zebpay to make the most of your cryptocurrency trading in India. Use safe cryptocurrency exchanges like ZebPay that can help you track your investments and offer key insights and technical analysis on the movement of cryptocurrencies.

Sources:

https://www.exodus.com/blog/how-to-read-crypto-charts-for-beginners/

https://www.stilt.com/blog/2021/06/how-to-read-crypto-charts/#What_is_the_Dow_Theory

https://tradingstrategyguides.com/how-to-read-crypto-charts/

https://blockgeeks.com/guides/learn-how-to-read-crypto-charts/

https://www.tomorrowmakers.com/stocks/planning-trade-cryptocurrencies-heres-how-read-crypto-charts-article

https://www.moneycontrol.com/msite/wazirx-cryptocontrol-articles/how-to-read-crypto-charts/

https://zebpay.com/blog/weekly-trade-summary-report-20/

https://zebpay.com/in/learn/looking-at-price-trends/

https://in.investing.com/crypto/ethereum/eth-inr-historical-data

https://in.investing.com/crypto/bitcoin/btc-inr-historical-data