It is an art to develop the right skills to read crypto cards. This new skill will help you not only track the price of your favorite coin, but the candlestick charts will actually tell you a lot about the trend of the market.
Our team at Trading Strategy Guides is a strong advocate of using charts and technical analysis. Crypto candlestick charts give you a more objective view of the price of cryptocurrency versus something a little more subjective like using your intuition.
Timing the market is a common problem that many new traders have. If you want accurate entry and exit points, you should use cryptocurrency cards. You can have a really good trading idea and believe that Bitcoin is about to go up, but if you pick the wrong point, you’re going to lose money left and right.
Leaving too early or checking out too late can also leave money on the table.
By using crypto charts in combination with technical analysis, you can balance it.
In this cryptocurrency guide, we are only going to cover some basics on how to read crypto charts and the cryptocurrency analysis tool you need to succeed in this business.
We’re also going to outline our favorite crypto analysis tools and resources for trading Bitcoin and altcoins.
Crypto candlestick charts
There are a few different ways to look at the charts, but our favorite crypto price chart is the candlestick chart.
Moving forward, we’re going to show you how to navigate a crypto price chart.
Now these are the key elements of the crypto candlestick charts:
Step #1 Time Selection
With the crypto charts you can choose the time frame on which to cover the candlesticks. This implies that the cryptocandlesticks will display all the transactions that took place in the chosen time frame.
For example, if your favorite cryptocurrency time frame is the 5-minute chart, then each candle represents 5 minutes.
Obviously, the time frame can be adjusted to make it even more customizable, or you can simply choose from the standard time frames (5 minutes, 15 minutes, 1 hour, 4 hours, daily, weekly, monthly).
Step #2 Share
The second thing that the standard cryptocurrency chart displays is the volume. The volume will show you how much trading activity has occurred during the selected time frame. Here is more information on strategies for volume trading.
The longer the volume bar, the more the buying or selling pressure. A green volume bar will highlight increased interest in the coin and buying pressure. On the other hand, a red volume bar will highlight a decrease in interest in the coin and selling pressure.
Step #3 Candlelights with Candlelight and Bullish
Thirdly, we must distinguish that there are two types of candlesticks:
- Carrying chandeliers
- Bullish candlesticks
By default, the bullish candlesticks are represented by green candles, which indicate that the price has risen during the selected timeframe. For example, if the closing price of a 5-minute candle is higher than the opening price, it is a bullish candlestick.
For bullish candlesticks, the bottom of the thick section represents the opening price, while the top of the body represents the closing price. The candlestick weeks represent the highest and lowest prices during the selected period.
* Note: Apply the same rules in reverse for bearish candlesticks.
The candlesticks will have different shapes and forms. These candlestick price formations are a great way to predict future market trends. There are many candlestick combinations that can predict what will happen next, and we call them chart patterns.
To distinguish the information you get from the charts for crypto candlesticks, you need the right tools:
Cryptocurrency Analysis Tools
Now we are going to share the best four crypto analysis tools to start trading Bitcoin and other coins. This section is not only for the crypto beginners but is also dedicated to more experienced traders.
There are many technical tools out there, and you will likely want to use a variety of them in combination. We believe these trading tools will help you avoid the sh*t coins and lose some of your money or make better trades in general. Read more about the best cryptos to invest here.
Cryptocurrency analysis tool # 1 TradingView
The best cryptocurrency analysis tool we like to use is the FREE TradingView charting software. This card platform has many capabilities and hidden features that will make your trading run smoothly.
It’s just a nice-to-have tool, but it’s not the be-all and end-all as there are other tools you can use at will.
Tradingview is extremely easy to set up and use. It is rich in resources, tools you can follow and more importantly
Cryptocurrency Analysis Tool # 2 Money Flow Indicator
Our second favorite crypto analysis tool is the Chaikin Money Flow Indicator.
The Chaikin Money Flow Indicator was developed by trading guru Marc Chaikin, who has been coached by the most successful institutional investors in the world.
The reason why Chaikin Money Flow is the best volume indicator and is better than the classic volume indicator is because it measures institutional accumulation distribution. So of course it shows when the institutional traders are buying and selling.
On a rally, the Chaikin volume indicator should be above the zero line. On the other hand, Chaikin’s volume indicator should be below the zero line.
Cryptocurrency Analysis Tool #3 Crypto Fear and Greed Index
The crypto fear and greed index uses a lot of information, they collect all the data to get a score and a valuation that shows you on a chart.
If the sentiment shows a reading below 20, it is dire fear. Usually, the price of cryptocurrency is lower and this indicates a possible bullish reversal. Conversely, a market sentiment above 80 shows extreme greed. In this case, the cryptocurrency is up and the index for fear and greed indicates a possible bearish reversal. Read this guide on Crypto Signals for more information.
Basically, we use the fear and greed index as a contrarian indicator. Market sentiment is a powerful thing that drives the market, and if we read the sentiment a lot, that’s the time we should look for a reversal. Also read this guide on Crypto Trading Bots.
Cryptocurrency Analysis Tool # 4 Fibonacci Extension
The Fibonacci extension is an extremely useful tool that can be invoked to spot counter-trend opportunities as well as reversal trades. We like to focus on the 1.618 level or the golden ratio.
There are all sorts of rules, but fundamentally there are only two things we look for when using the Fibonacci expansion levels. The first thing is a trend, the second is a correction that has three reference points. We use these swing points to draw the Fibonacci extension levels and to find possible reversal points in the market. Read the Fibonacci trade here.
The golden ratio can be found everywhere, it is also a ‘magic number’ that we can also use in our trading. One way or another, many professional traders take the golden ratio in their trading, because the market reacts to this particular level with a high degree of accuracy.
Conclusion – Krypto candlestick charts
Reading candlestick charts is a practical skill that everyone should learn if you want to aspire in the challenging cryptocurrency market. While the cryptocurrency analysis tool can be valuable weapons in your trading arsenal, you need to apply it correctly to gain any insights from it.
The crypto candlestick charts can help you better leverage the market, so you can use it as a supplemental tool for your research.
This guide only outlines the basic concepts in technical analysis. We recommend that you strengthen your knowledge and use these tools to set up your cryptocurrency strategy that meets your needs. Our TSG blog is rich with trading strategies that can help you achieve your financial goals, so be sure to check out our Best Bitcoin Trading Strategy.
Thanks for reading!
