Proper Way to Analyse Cryptocurrency charts

by | Jul 6, 2022 | Market, Market News, News | 0 comments

As a crypto investor, chart analysis is the foremost and essential skill to acquire. To cultivate an impressive crypto portfolio and financial transactions, one should interpret the outcomes of the chart with derivative strategies and methods. So, for beginner investors, it’s important to analyze a cryptocurrency chart properly to gain effective estimations and stakes.

What are Cryptocurrency charts?

The Crypto chart’s purpose is to make better investment decisions when dealing with cryptos through the interpretation and analysis of current evaluations of price, volumes, and time intervals with graphical interpretations.

The formation of a crypto chart aligns with the past evaluation/price regulations of the cryptocurrencies and can be used in scouring effective opportunities for investment.

To analyze a crypto chart, the most general one is the candlestick chart. The red bar/candle you see represents a lower closing price in contrast to the starting price while a green bar/candle represents a higher closing price in contrast to the starting price, both given in a specified time frame. The former red candle indicates that the price of the asset has declined while the latter indicates the asset price has inclined.

Pre-requisite charts elements you should know

Body: Represents the open/close range

Wick: the shadow represents the intra-day high and low

Colour: represents the direction of market pattern =, green/white indicates price increase, while red/black indicates price decrease.

The bars/candles vary in size, shape, color, and form magnitude of differential patterns. With the record of these patterns, crypto traders strategize their crypto trading.

Types of Crypto Chart Patterns

Bullish Pattern

The bullish pattern from the aftermarket downtrend indicates price reversal, ultimately singing for traders to open a long position to benefit from any upward trajectory.

Example: Hammer Candle Pattern

The pattern indicates the stock’s nearing downtrend at the bottom, and the bar/candle’s body is short which indicates the seller is negotiating low prices in a given trading session which would end with a session on high race with buying pressure.

Bearish Pattern

They form after a market uptrend and indicate a point of resistance. Due to negative perception, traders would close their long position and instead open a short one to benefit from the falling price.

Example: Hanging Man

The equivalent of the hammer pattern is bearish, it has the difference of forming at then ed on an uptrend. Indicating, a significant sell-off but an elevation in price nonetheless. The large sell indicates the monopolistic asset losing market control.

Famous patterns for proper analysis

Wedges

The wedge pattern appears when the market trend starts to settle downwards and occurs in a breakout. Markets are often recorded to move sideways in order t wedge back and forth until they finally move in a firm direction.

Head and Shoulders

This pattern is a reversal pattern that might show up at a peak or bottom of a continuing trend =. If it’s in the bottom, it is known as an inverted head and shoulders pattern. The patterns represent the conflict between traders and investors with push and pull.

What are the support and resistance levels?

When analyzing the final interpretations of the crypto chart, it’s vital to be familiarised with support and resistance level. Support level refers to a price level in which the asset doesn’t fall beneath a fixed period, while resistance level refers to the price at which the asset can’t be expected to increase any higher.

Afternote

For beginner investors, it’s essential to be familiarized with cryptocurrency charts

at the behest of investing in the currencies. The trading requires trading platforms that can help you determine patterns and indications for your financial advantages.