For many, understanding cryptocurrency price charts might seem like a challenge. However, it should not be. In this cryptocurrency price chart guide for beginners, we answer the key question: How to Read Cryptocurrency Price Charts?
CryptoToday – Global Bitcoin buzz does not seem to stop – millions of investors are injecting their funds into the cryptocurrency market every day. The disturbing thing is that more than half of these traders are not experienced enough, they are so-called impulsive traders. Financial regulators from all over the globe are looking into ways of regulating the digital currency market in order to protect investors.
How to Read Cryptocurrency Price Charts?
We believe that one of the ways to protect your funds from disappearing from your wallet is to understand the basics of cryptocurrency trading. Today, we would like to draw your attention to one of the key topics every cryptocurrency trader needs to understand – cryptocurrency trading charts.
Analyzing cryptocurrency price charts and understanding trading terms of the financial world can be daunting for a beginner. Nevertheless, we put together some of the essential points you need to take note of.
How to predict cryptocurrency price trends?
The following two methods do not only apply to cryptocurrency market. One could use these methods for forecasting the price movements in the Forex or stock market, as well.
Forecasting price movements is not an exact science, it is more of a method that helps to determine the potential further direction of a market. However, even the most experienced traders sometimes make mistakes.
The two key approaches to predicting cryptocurrency price development are fundamental and technical analyses. Fundamental analysis takes into consideration forces of an economy, a security, or a company. The technical analysis examines the direction of prices based on the market data, mostly historical prices and volume that are present on price charts.
How to understand cryptocurrency price charts?
Cryptocurrency price charts are no different from the usual charts forex traders use, for example. In order to carry out technical analysis on, say, Bitcoin price, you will need to find a price chart that displays data in a clear and readable manner. A good place to start with – Coindesk’s Bitcoin Price Index or Coinmarketcap data charts.
The simplest type of price chart looks like this (a line chart):
This chart uses the closing prices of any given period of time to draw the price line. This kind of chart can provide you with a quick overview of the history of prices. However, in order to draw the conclusion, you would need more than that.
More sophisticated chart – cryptocurrency candlestick chart
This is the most widespread type of chart that traders use. These charts can show more data than just the closing price. Each of the “candles” indicates the opening price, the lowest and highest price of the given period and the closing price.
Moreover, the color of the candle body stands for whether the closing price higher than the opening price, or lower than the opening price. Normally, a green bar will indicate an “up-bar” and the red bar stands for “down-bar.”
The candlestick chart falls under the family of OHLC (open high, low close) price charts. In addition, there is a myriad of other chart types that can be useful for experienced traders. There is another type of charts that are non-time based (NTB). However, amateur traders might find them less intuitive.
Therefore, if you are just starting your cryptocurrency market journey, it would be a smart decision to understand the basics of a candlestick chart.
Now, after you’ve familiarized yourself with the essentials of how to read cryptocurrency price charts, a good idea is to start tracking Bitcoin’s price movements on a daily basis. You will definitely notice certain regularities appearing on the charts – this would most probably signal the trending behavior of prices.
Do you have any questions? Do not hesitate to ask them in the comments section below.