bitcasino
Menu

Crypto trading guide: How to read crypto charts for beginners

Stepping into crypto trading can take a few steps for beginners. There’s a lot to learn and many theories to understand before you can secure your profits. In most cases, it’s as easy as following the trend set by others who know more than you. Even that will require considerable knowledge in how to understand it. One of the most effective ways to do it is by reading the crypto charts. 

Charts of market trends are available online, provided by a wide variety of exchanges. Some of the best software wallets have them, too, giving you a window to trading opportunities everywhere you go. Learning how to read them is easy. You just need to understand how it works by identifying their parts.

Crypto chart is a technical chart best displayed in candlesticks

Crypto prices are shown in a wide variety of charts but candlesticks are the best. It helps track market trends to give you an idea of when’s the best time to sell your assets earned from trading or Bitcasino live casino winnings. Crypto casino betting is one of the many advantages of crypto. To interpret a candlestick chart, you just need to follow colour-coded bars on the graph. Prices are shown in the Y axis while time goes forward in an X axis. 

Each candlestick covers a certain period of time and another one with a different colour on its right is the immediate follow up from when and where the last one left off. Green shows rising prices while red indicates a drop. These are the most common colour settings but some exchanges can use different colours or allow their users to change them. 

The thick bar is the body and it indicates the opening and closing of prices. If it’s rising, then the opening is at the bottom while closing is at the top. The opposite is true for dropping prices. Lines extending from either side of the body are the wicks, indicating the highest (top side) and lowest (bottom side) price points. Those are the respective peaks and floors of the asset’s prices while the body shows the stable range based on market practices. 

If the volume is enabled on the candlestick, then it shows varying thickness of the body. While its height indicates change in price, the thickness shows the volume. This is the total amount of crypto exchanged during that time period.

What to look for in a candlestick chart

After understanding how a candlestick chart works, you should move on to what to look for whenever you glance at one. There are several pieces of information you can get after combining all of the data. Think of it as reading where the following conclusions are the message and parts of the candlestick chart are the letters. 

Chart patterns 

Chart patterns refer to the fluctuations of the crypto’s prices in the past relative to the present. It forms a trend that can be identified as certain patterns which can be read as the general state of the market. The broadest patterns were bearish and bullish where the former means prices are dropping while the latter means it’s rising. 

Support and resistance levels

Support levels show the floor of the candlesticks in a chart while resistance indicates the peak. It means that the price of the crypto has reached those points on multiple occasions but has trouble pushing further. Once it reaches them, it will be pulled back and take the trend in the opposite direction. 

There is no force stopping prices from pushing further so it’s never certain if the market prices will stop when they reach either point. Many investors buy more crypto when prices hit the support level or sell once it’s close to the resistance level. Gamblers can also use this to find when’s the best time to buy new crypto to deposit and claim the largest match Bitcasino bonus for the lowest price. 

PLAY THE BEST CASINO GAMES AT BITCASINO

Crypto charts can be read using technical analysis 

Technical analysis is the discipline used to find patterns in the crypto chart using the candlestick chart. The concept is to use the cryptocurrency’s market history to predict the best time to either buy or sell. It can be quite difficult to make the best decision because even the most valuable cryptocurrencies can subvert expectations. Nevertheless, technical analysis has helped investors most of the time and here’s how you learn how to do it.

Technical analysis indicators in crypto trading

Technical analysis is all about using data on the crypto chart and predicting the future trajectory of the market prices. Indicators are chart patterns that show a potential change in the market trends, allowing you to get ahead of the market. They’re not 100% accurate but they are observed to have happened multiple times that it’s roughly reliable to an extent. Here are the three most prominent ones used by crypto traders:

Moving averages

This is one of the popular indicators for beginners because it only needs to track the last few candlesticks starting with the most recent one printed. The easiest to track is 9 at minimum but ramping the sample size to 200 can give you a better idea of the asset. Most resort to 20 as the perfect balance. 

You just need to see how close the candlesticks are to the support and resistance levels. It’s an uptrend if the candlesticks are moving from lower left to upper right and it’s a downtrend if it’s sloping from upper left to lower right. This is helpful for following a regular trend which is common for crypto with the most number of owners like Bitcoin (BTC) and Ethereum (ETH)

Relative strength index 

This is about finding the strength and weaknesses of an asset during price changes. Its goal is to see if the asset has been overbought or oversold which can indicate a market change in the immediate future. Otherwise, the trend will continue its direction. You can compute for the relative strength index (RSI) using this formula: 

  • RSI = 100-[100/(1+(average gain/average loss))]
    • Average gain = sum of gains over the last 14 candlesticks / 14
    • Average loss = sum of losses over the last 14 candlesticks / 14

The asset is overbought if the RSI is equal to or greater than 70, indicating a price drop in the immediate future. It's oversold if the RSI is equal to or less than 30, ushering a price rally soon. Market correction for oversold assets tend to be slower than for the overbought status. 

On-balance volume

This is considered by many as the best indicator for trending assets like BTC and ETH. However, it’s a bad choice for fast-paced trading like crypto scalping. On-balance volume (OBV) finds and measures the flow of the crypto trade volume. Its formula only needs updates of today and yesterday but it changes depending on which one is higher

  • Yesterday’s closing price is higher than today’s closing price
    • Current OBV = Yesterday’s OBV - Today’s volume
  • Yesterday’s closing price is higher than today’s closing price
    • Current OBV = Yesterday’s OBV + Today’s volume
  • If the closing price is the same for both days, then they have the same OBV 

OBV isn’t meant to be used on its own. It simply gives you a warning signal of when the market is leaving the trend line. Once you see the day’s prices are still moving, then it’s an indicator that a trend reversal is about to happen. Use moving averages or RSI indicators to find other points in the past that show similar inflow and outflow tendencies to confirm. If the OBV indicator is correct, then it’s time to sell or buy in. 

Three market trend directions

Downward and upward are the easiest motions to understand in market trends. If you look closer, you’ll find three different lines that you can use to understand the crypto chart better. Here’s a quick overview of each:

Primary

This is the most surface-level trend you can read which usually just follows the motion of the candlesticks in a specific time frame. You can set it to months or years with the primary trend referring to the big picture. 

Secondary

This shows the temporary points when the primary trend is corrected throughout the chart. Secondary trend indicates the pullbacks, signalling a price reversal soon. Therefore, this is a good indicator of when the resistance and support levels are in a trending asset. 

Tertiary

This is often ignored by long-term investors but given importance by quick traders. Tertiary trend zooms in closer to the daily changes in the market. You can apply indicators on this and see patterns lasting for over 10 days or less but it is usually not a good idea for big investments. It’s a good trend to follow if you like to liquidise your crypto and just buy more for weekly deposits and withdrawals at Bitcasino live casino. 

SIGN UP ON BITCASINO AND ENJOY THE BEST CRYPTO GAMES
new-cta-english
CTA-1CTA-2

Recent Post

April 19, 2023
A quick understanding of Bitcoin hard forks

A quick understanding of Bitcoin hard forks When investing in cryptocurrencies, you have to take time understanding all of the important terms. Among these are forks which refer to assets that are related to certain blockchains like Bitcoin.  Throughout the years, there have been several popular coins in the market, among them is Bitcoin which […]

Read More
April 12, 2023
What is Double Ball Roulette and how to play it

What is Double Ball Roulette and how to play it Roulette is an amazing game for how versatile it is, appealing to different kinds of gamblers. Most people know it for its standard set up with one ball, one wheel, and 37 numbers because it’s rare for a software provider to try changing it. Some […]

Read More
April 5, 2023
What is Ethereum's Shanghai hard fork event?

What is Ethereum's Shanghai hard fork event? Ethereum is known as one of the most popular cryptocurrencies in the market. With the potential that it has, it is no longer that surprising to know that there are several developers who have decided to fork something useful from it.  Throughout the years, there are several amazing […]

Read More
CTA-1CTA-2
chevron-downcross-circletext-align-center