How to read cryptocurrency charts

It is computed by multiplying the entire circulating supply of the currency by the price of each coin. The more stable a coin is, the more consistent its market cap value is.

This formula is used to calculate a coin’s market capitalization:

Market cap = Total Circulating Supply × Price of each coin

Did You Know? Since it reflects what investors are prepared to pay for a stock, the market cap evaluates what a firm is worth on the open market, as well as the market’s view of prospects. You should know more about the top-rated software for crypto tax for advanced analysis.

What Are Crypto Candlestick Charts?

Crypto candlestick charts are by far the most popular charts available.

How to read cryptocurrency charts

It ends with a downward trend (correction) and accumulation begins again.

In a bear market, the phases are triggered in the opposite direction.

  1. Indexes should confirm each other

The signals that appear in one index must match with the signals of another index.

  1. The volume should confirm the trend

The purchase/sale volumes of the asset should increase/decrease in the same direction as the trend.

  1. The trend is considered valid until a clear signal of a reversal is received

This is not so easy to predict, since no one knows exactly when the price will break the trend and go in the opposite direction.

How to read crypto charts

It takes into account: the reaction of market participants to the news, their expectations, their optimism (“bull market”) or disappointment (“bear market”), and so on.

  1. There are three trends in the market

Three trends coexist in any market: short, medium, and long.

  1. The long-term has three phases

The accumulation phase is when the price as a whole does not change and fluctuates within a small range. The most savvy investors in this phase, after analyzing the market, accumulate an asset.

Phase of public participation.
When a crowd starts buying an asset.

The speculation phase.

How to read cryptocurrency graph

The green up bar can be considered “Bullish” and means it is on an uptrend. The red down bar means it is “Bearish and on a downtrend (check out my glossary of crypto terms for more).
This type of chart is more useful for traders because it helps them to do technical analysis and try to predict where the price will go next.

Now that we understand what makes up the basics of a candlestick chart, lets look at the entire interface and talk about the most important parts.

Binance Crypto Chart Interface

Now we are going to cover the general interface, because this is what confused me the MOST when I started out. For months I didn’t even realize some of these basics that I am going to show you.
I put boxes and numbers around the things that are the least obvious.

How to read crypto candlestick charts

When the faster moving average line is moving away from the slower one, that’s called divergence.

Bollinger Bands

Bollinger Bands were invented by a technical trader named John Bollinger. They are bands that overlay a price chart. They involve using a 20-day slow moving average of the closing prices on each day, dropping the earliest price, and adding the price on day 21.

The standard deviation of the price is also factored in.

Many feel that as the price gets closer to the upper band, the market is in an overbought state, and as it moves closer to the lower band, it’s in an oversold state.

RSI

RSI stands for relative strength index, and it’s a momentum indicator used to identify overbought and oversold conditions. The bigger the price changes over a given period of time, the more the line graph travels up or down.

How to read crypto market charts

They can be used to try to gauge where the next bull trend may come to an end.

Digital Asset Technical Analysis for Beginners

Technical analysis involves using historical price graphs to predict what could happen to the price of an asset or a security. Arguably, the most popular technical analysis tools that can be used with digital assets include moving averages, MACD, Bollinger Bands, and RSI.

Moving Averages

A moving average serves to smooth out the sharp ups and downs of price action to reveal a clearer overall trend.

Regardless of the type of moving average, it takes a set number of data points and averages them. The resulting value is plotted on the graph.

How to read bitcoin chart

The market capitalization is calculated easily. It is necessary to multiply the number of circulating coins by their value.

The Japanese candlestick charts

The “Japanese Candlesticks” chart displays not just a chaotic movement of quotations, it also very sensitively captures the mood of the crowd. And since the moods are cyclically repeated, the same pictures periodically appear on the chart.

With the help of a candle, a trader can analyze 4 main factors: the opening and closing prices, maximum and minimum prices.

To determine these points, it is necessary to determine the body and wicks/shadows of the candle.

The body of the candle is usually colored red (bearish) or green (bullish).

If the candle is green, then the opening price is indicated on the bottom face of the candle, and the closing price lies on the upper face.

How to read crypto charts binance

Since these knowledgeable investors are in the minority, the asset price in the crypto price chart does not fluctuate substantially throughout this stage.

  • The public involvement phase, often referred to as the absorption phase, occurs when the rest of the market follows experienced investors. As more people become aware of these phenomena, conjecture becomes prevalent.
  • The distribution phase takes place after the absorption phase’s conjecture.
    Investors who are well-versed in the market begin to redistribute their assets. After a period of intense speculation, the price begins to retrace as knowledgeable investors begin to distribute their holdings to the market due to the asset’s limited supply.
  • How to read crypto charts pdf

    Cryptocurrency charts are required if you want to have precise opening price points and exit locations. You could have a fantastic trading strategy and believe that Bitcoin is set to rise, but if you select the wrong spot, you’ll lose money left and right.

    If you leave too soon or too late, you may be leaving money on the table as well.

    Luckily, you can counteract this by using crypto charts in conjunction with technical analysis.

    The strategy used to predict a cryptocurrency’s probable price movements in the future is called technical analysis. Technical analysis trading forecasts the market using charts and other indicators. It can be a fun and exciting procedure that helps you gain a thorough understanding of the market.

    The following are the three key principles of technical analysis:

    • Everything is discounted in the market price activity.

    How to read crypto charts for dummies

    What Are Cryptocurrency Charts?

    Cryptocurrency Charts is a snapshot of the historic and current price movements over a specific timeframe, ranging from seconds to minutes, days to weeks, and even months, years and more. The price movements are represented as a line, graph, area, bar charts, Japanese candlesticks and others.

    Time Frames for Crypto Charts

    The popular time frames that an analyst considered are:

    • 15-minute chart
    • Hourly chart
    • 4-hour chart
    • Daily chart

    How to Calculates the Cryptocurrency Market Cap?

    Market Cap = Total Circulating Supply x Price of each coin

    This is an excellent indicator of the stability of the coin.

    For example:

    As you can see, this coin’s market cap is pretty stable for one month.

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