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Bitcoin Charting for Beginners

Crypto Chart

September 18, 2020 | 

JOHN K MWANIKI |  1 Comments| 



Get Into Cryptocurrency Trading Today

Anyone joining the crypto world must know how to read charts. The chart is a database of all the information you will ever need when trading. Whether you are trading full time or on the side, knowledge of charts is non-negotiable. 

At the start, reading the charts might seem daunting. You will only see lines with inductions. Yet every information on crypto charts is vital. Even the colors make a difference. 

There is a lot to learn. It might take ages to become a pro. 

You don't have to worry, though. This guide gives you the necessary soft landing. It will help you learn the basics of the charts. In the end, you will be in a position to tell the value of an asset.  

You will understand the present, past, and future value of an asset. You will also understand when to trade either a short or long position. 

Let's get to it;

The Dow Theory 

Dow Theory is the most critical aspect of understanding crypto charts. It is the force behind the technical analysis and the charts. Some of the fundamentals of the theory are that the markets take everything into consideration. 

No market price movement is ever a mistake. For that, the market integrates the current, prior, and upcoming details. It also looks into the possibility of other factors coming up like regulations. 

The Dow Theory provides for three types of price movements. The main ones are either the bull or bear runs that occur over a long period. The next is the swing, with the least a short swing.

The theory also accepts the role of news on crypto prices. The crypto integrates new information fast enough and changes to reflect the same. All the stocks within a market confirm with the other. A rise in one asset should mean a rise in the others. 

Understanding Trends

Market trends involve the price movement of the assets. You must understand the trends to understand the trading options. The market trends come in three phases; 

  • Accumulation – this is when the traders are starting to notice the asset. The activity at this point is low, with the traders still not sure of the possible growth. 

  • Absorption – the sustained accumulation gives way to the absorption phase. Several other traders start to notice the changes in the asset. There is an influx in the market activity of the asset.

  • Distribution – the distribution comes after a sustained market acceleration. At this time, the traders realize the rise will not stay on forever. They start looking for other viable investments. The redistribution leads to a fall on the asset. 

Moving Averages 

Investing requires the trader to know the direction of the price movement. Moving averages look into the previous changes to determine possible movements. It involves taking into account the daily movements then finding an average. 

A high moving average means the asset is on a bullish run while the lower ones mean a bearish trend. The traders use the moving averages when looking for long term positions.

It is advisable to use a more extended period when calculating the moving average. 

Relative Strength Index 

Relative Strength Index (RSI) is the measure of the current market value. It looks into the asset price changes and the respective speed. It uses past and present market fluctuations. 

It combines the data with the past and present gains and losses. The results determine whether the asset is oversold or undersold. 

The formula for RSI is, RSI = 100 – (100/(1-RS))

An undervalued asset is excellent for investment for its likely to gain in the future. An oversold asset is likely to decline as the market corrects. 

An oversold asset comes with an RSI of 70+, while an undersold asset is less than 30. 

Resistance and Support Levels 

The levels are the indications of the end of a bearish or a bullish move. The support level is where the crypto on a fall tends to bounce back. It picks up from this point and resists any further decline. The level is marked by enhanced trading activity. A fall past the support is irredeemable for some time. 

The resistance level is the opposite of the support. It implies a bullish run comes to a stop. It is when the trading activity suddenly stops. The traders tend to think of a possible decline hence tend to hold. An asset that passes the resistance level is headed for much higher gains. It depicts the traders' confidence in the asset. 

Cryptocurrency Analysis Tools 

The analysis tools are another component of the trade chart every beginner must understand. However, they also come in handy for experienced traders. The charts come with several analysis tools. Consider using the tools together for more accurate results.

Top of the crypto charts' tools are; 

  • Trading view – it is a functional tool that allows you to observe the market movements. It is easy to set up and comes with several resources and instruments. 

  • Crypto fear and greed index – it is a representation of the market data on a graph. It indicates the traders' involvement with the assets. A score of less than 30 shows a fear state. This is low with a likelihood of a bullish run. Reading above 80, however, is on the greed side. It indicates a possible bearish run. 

  • Money flow indicator – this is an upgrade on the trading volume measure. It looks into the institutional traders' market movements. It helps in establishing the right time to sell or buy. 

Bottom Line 

Understanding crypto charts is essential for any trader. It determines the asset to invest in. It also helps you realize when to sell or buy. The crypto charts come with several market analysis tools.

Becoming a pro on the charts takes time. Use this guide for the soft landing when beginning crypto trading.

Buy & Sell Cryptocurrency Instantly




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Philip Gabriel
Welcome to Cryptocurrency , I’m duane juane . I’m a bitcoin trader and the time I’m writing this blog I can’t find a single review about many bitcoin trading signal services and companies. I have lost lots of money testing them for over an year. I don’t

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