Crypto Trading Strategies

how to read cryptocurrency exchange charts

Learning how to read crypto charts is an essential skill if you want to get into trading. Having said that, learning technical analysis and all the jargon that goes along with it can be pretty intimidating for beginners.

This is why we have written this guide to ease your journey. NOTE : Bullish movement is an upward and positive movement and bearish movement is a downward or negative movement. It is essential to know the Dow Theory to have a better grasp of technical analysis. The fundamental ideas behind Dow Theory are as follows:. History tends to get repeated. Because of this reason, it is possible to predict market behavior as traders react the same way when presented with a particular kind of pattern.

These three movements can happen simultaneously, for example, a daily minor movement in a bearish secondary reaction in a bullish primary movement.

Accumulation phase : This is the period when knowledgable investors start buying or selling the asset against the general perception of the market.

More and more people follow these trends until rampant speculation begins. Distribution phase : After huge speculation, because of the limited supply of the asset, the price begins to retrace as the knowledgable investors begin to distribute their holdings to the market. As a result of it the prices start falling along with the volume.

The stock market incorporates new information as soon as it becomes available. Once this news is released, the price of the asset changes to reflect this new information. The price reflects the sum of all the hopes, fears, and expectations of all the market participants.

Factors such as interest rate movements, earning expectations, revenue projections, major elections, product initiatives, etc. To understand how this works, consider this example. There is a company A and a company B. Suppose A is a handicrafts company and B is a transportation company. Now, if A gets more business, then B will get more business as well since A will need B to transport their goods and vice-versa.

So, if an investor is interested in investing in company A, they need to look at the performance of company B. These two averages should be moving in the same direction. If these two averages are diverging, then it is a sign that market trend may be reversing soon. Dow Jones believes that volume is a secondary yet important factor in recognizing price signals. This is how volume reacts during major trends:. Technical analysis is a tool, or method, used to predict the probable future price movement of a currency pair, cryptocurrency pair, or a stock.

It can be a creative and dynamic which helps you gain a very deep perspective into the market. When a technical analyst examines the price chart, along with the technical tools, they also need to be mindful of the time frames that they are considering.

Popular time frames that traders most frequently examine include:. The time-frame that a trader chooses is directly dependent on their personal trading-style. Traders broadly fall into two categories:. Intra-day traders: These are the traders who open and close their position within a single day. This is why these traders prefer short timeframes like hourly, min, or even 5-min charts.

Long-term holders: Long-term holders may hold their position for weeks to months and years. These holders find more value in using hourly, 4-hour, daily, or even weekly charts. A min chart may be a very significant indicator for an intra-day trader but it may not be that important for a long-term holder.

Market cap of a coin is calculated using this formula:. You can check the market cap of the top cryptocurrencies on coinmarketcap. Market cap is a great indicator to know about the stability of a coin. This is how its monthly marketcap looks like:. Now compare that with MaidSafeCoin. As you can see, compared to Bitcoin , MaidSafeCoin is a lot more volatile. By far the most popular chart out there.

What we are going to do now is to help you make sense out of those pretty patterns. The first thing you will notice is the red and green candlesticks lying one after another. Each candle shows you the price movement of the asset during a specific time interval. Along with the closing price, each candle shows the opening price, the lowest, and highest price of the given time-period as well as the closing price.

As you can also see, there are to kinds of candlesticks, the green candle, and the red candle. Every candle has a body and a couple of shadows that are sticking out of it. The body shows you the difference between the opening and closing price. The shadows show you how high or how low have these opening and closing prices have gone respectively.

In a green candle, the upper shadow is the close price while the lower shadow in the open price and vice-versa for red candlesticks. The beauty of these candlesticks is that it clearly shows you exactly where the market turned and helps you identify different patterns which may help you predict how the market will act. Bullish Reversal Patterns. A hammer is a bullish reversal pattern that forms after a decline in price. So, what does it exactly mean?

The hammer signifies a bullish reversal and shows that the buyers are coming in strong into the market. The first candle is bearish while the second candle is bullish.

The body of the second candle completely overwhelms and covers the first candle. The reason why this is such a great indicator is that the bulls have increasingly stronger momentum. A morning star is a 3-candle bullish reversal pattern which forms after a decline in the price. This is how you recognize it:. The morning star pattern tells you that the sellers have been exhausted after fighting with the buyers and the market is now bullish. All these patterns are the reverse of the three bullish reversal patterns.

The buyers took control as the market opened and pushed the price high. At the close, there was huge selling pressure from the bears. The selling momentum was so strong that it overwhelmed the bulls. In short, a Shooting Star signifies a bearish reversal and shows that the sellers are coming in strong into the market. The Bearish Engulfing Pattern tells you the sellers have overwhelmed the buyers and are now in control.

An Evening Star is a 3-candle bearish reversal candlestick pattern. This is how you recognize this pattern:. It works by comparing the magnitude of recent gains to recent losses to determine whether crypto has been overbought or oversold. In the equation above, RS is the ratio between the average of the days the coin was up to the average of the days the coin was down.

This is why RSI should be a tool that you use along with other indicators to predict the future price of a coin. However, since the market was down, the RSI finally went up on November end, rallied around 30 for a bit before finally going up around 17th December. Along with RSI, you should also look into moving average and Bollinger bands. You can learn more here. In technical analysis, support and resistance are predetermined levels of the price of an asset at which the tends to reverse its trend.

These levels are denoted by multiple touches of price without a breakthrough of the level. Traders often buy at support and sell at resistance. The reason why we have chosen this is that at three distinct points as highlighted by the red box , the market came down to that level and then picked itself back up. This can happen due to multiple reasons which we will discuss later.

However, to just give you a brief idea of how the dynamics works, the sellers or bears sell off the asset and bring the price down. If the sellers are carrying enough momentum and actually manage to breach past this level, the price will continue falling until it reaches another support level.

The red line now becomes a resistance level. A resistance level is a point at which the price of the asset stops rising. Check out the chart below. Resistance is opposite to the support level. As you can see, the chart meets the level at four distinct points and bounces down. To show you how it works, the buyers buy the asset until the price of the asset increases. Check this out:. So, to understand why the market creates support and resistance levels, you need to understand the psychology of the market.

In a market, there are typically three types of participants, at any given price level:. Price can fall through a support level and meet support at another level. In this case, the original support level becomes resistance. So this is how the three participants act now:. The biggest factor behind price movements are emotions like fear, greed, optimism, and pessimism. You can think of a price chart as a graphical representation.

how to read cryptocurrency exchange charts

How to Read Crypto Charts – Beginner’s Guide

Regulation 2. Company Registration 3. Members 4. Components 5. Graphical user interface 6. Secure private system 7. Trading engine 8. Liquidity 9. Cryptocurrency wallets

how to read cryptocurrency exchange charts

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Cryptocurrency is a type of digital currencythe issuing and accounting of which are based on cryptographic methods such as Proof-of-work — which assures that coins are mined only by users putting computing power to work in solving complicated mathematical problems — and asymmetric or public key encryption — which assures that the network that the currency runs on remains safe, by making transaction requests secret, verifying and protecting identities, and making double-spending virtually impossible.

The system functions in a decentralized fashion on a distributed computer network. In case of cryptocurrency blockchain it is impossible to cancel or return the funds sent to the recipient. Nevertheless, there are opportunities for transactions involving the intermediary, when the consent of all three or any two parties is required to complete or cancel the transaction. The funds cannot be forcibly frozen or recovered without access to the owner's private keyalthough the parties of the transaction may volunteer to temporarily block their funds as collateral.

Explaining the definition of cryptocurrency, as a rule, there is an upper limit to the total volume of coins to be issued. However, some cryptocurrencies do not have such fixed upper limit for the total volume of coins to be issued.

They are emitted in function of the available savings and demissioned by mandatory destruction of a small fixed amount in each transaction. All currently existing cryptocurrencies are used pseudonymously - all transactions are public, but there is no default binding to a particular person, although the user's identity can be established if the necessary additional information is known.

All big cryptocurrency exchange go here ask for some sort of identification. Cryptography for the purpose of confidential payments began to be used sincein the DigiCash system of David Chomwhose company went bankrupt in However, his payment system was centralized, and the term "crypto currencies" was used for the first time after the appearance of the Bitcoin payment system, which was developed in by a person or a group of individuals under the pseudonym of Satoshi Nakamoto.

Bitcoin uses SHA hashing under a Proof-of-work. Later, other Bitcoin-based cryptocurrencies called forks appeared. Some relevant examples are:. Before starting trading the cryptocurrency, a special wallet must be created. Users have an array of wallets from where they can choose one, some of them may even store more than one type of cryptocurrency.

They can be downloaded on the appropriate sites, bought to store the coins in a hardware device, stored online, amongst other methods.

Wallets that users may acquire can be found on amongst other sites :. Some of the wallets found here are suitable for storing several coins, called "multi-wallets". Some others, do not allow for exchange with other cryptocurrencies, which may cause users to have to acquire another one that supports his needs.

For a newcomer, the best way is to go through an online cryptocurrency exchange house. On such sites it is possible to buy, sell or exchange a currency conveniently. Wallets on this sites are more often used by people who just want to buy some coins, make purchases on the Internet, gamble or invest in crypto.

Some specialists predict that cryptocurrency is a great way to make investments and earn money as the trading is not as difficult as it looks like, but it is important to know what is cryptocurrency, how to buy it, be able to make analysis and understand the difference between cryptocurrencies. What is cryptocurrency?

13 TRADING PATTERNS - How to read the Charts

How to Start a Cryptocurrency Exchange

Intra-day traders: These are the traders who open and close their position within a single day. When either bank or wire transfer is selected, the user will be required to enter both the destination bank or wire link as well as the funds desired to be withdrawn. Mostly free, except from premium paid features. When a coin goes down it is advisable to check the volume which accompanied the decline. Orderbook — Here you can see all the limit orders waiting to be filled. The shooting star pattern might indicate that the uptrend is over and it is time for a downtrend. Step 2 Volume The second thing, the standard cryptocurrency chart will display is the volume. Cryptocurdency can choose to enter a specific amount for your particular asset, in this case, we selected USD-BTC pairing with the order type set to default. Limit orders are great for those wishing to target a particular entry or exit position. This explain was for Coinigy charts, tead should work well with other chart applications. Once the link is clicked, your Binance account is ready to be used. Note: Creating multiple accounts with the intention for sole ownership could result in a ban from the exchange, you may need to link multiple accounts. For the sake of simplicity, we entered 0.

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