If you want to trade cryptocurrency, you’ll need to learn how to read crypto charts. Understanding technical analysis and all the language that comes with it, on the other hand, might be scary for novices. This is why Caizcoin has created this guide to make your experience easier.
Your first step must be the “need” to know how to read crypto charts if you’ve joined the crypto boom and want to start trading cryptocurrencies and turning your Bitcoin into cash. You must also undertake a competent technical analysis based on the Dow Theory if you’re going to make effective crypto transactions. What about candlestick charts from Japan? Are they equally important?
Take a look at the article below. To learn the fundamentals of how to interpret crypto charts and the intricacies that come with them.
Explaining Dow Theory
To understand technical analysis, you must first learn the Dow Theory. Dow Theory is based on the following principles:
When it comes to price, the market considers everything. If it concerns crypto, various variables such as the present, past, and future needs and any restrictions that may affect the crypto market have already been included in current asset values.
Price changes aren’t entirely random, and they are more inclined than not to stick to patterns, whether long or short-term. The price of a coin is more important to market analysts than every circumstance that influences its price. As soon as new information becomes available, the market adopts it.
The asset’s price adjusts to reflect any new information. Asset prices are an accurate representation of market players’ aspirations, anxieties, and expectations. Interest rate fluctuations, profit estimates, sales predictions, significant elections, product developments, and other variables are all included in the market price.
History tends to repeat itself. As a result, market behavior may be predicted since traders behave in the same way when confronted with a specific pattern.
What is the definition of technical analysis?
Technical analysis is a process or approach for anticipating a cryptocurrency pair’s expected future price movement. The more precise the market reading, the better the technical analysis.
To do technical analysis, you’ll need to look at cryptocurrency charts. The sections that follow describe the characteristics of crypto charts that you should think about.
Also Read: How to buy and sell Caizcoin?
How to read crypto charts?
If you really want to start dealing in cryptocurrencies and turning your Bitcoin into cash, there are a few things you need to know. You’ll need to learn how to interpret these sorts of charts; you may also do so by contacting Caizcoin. You must execute competent technical analysis based on the Dow Theory to make profitable crypto transactions.
How to Calculate Market Cap
A-cap-and-trade graph may be used to assess market capitalization, a reliable indicator of stability. It’s calculated by multiplying the currency’s total circulating quantity by the price of each coin. The more constant a coin’s market cap value is, the more stable it is.
The market cap is calculated using the following formula:
Total Circulating Supply x Price of each currency = Market Cap
The market cap analyses what a company is worth on the open market, as well as the market’s judgment of its prospects, because it represents what investors are willing to pay for a stock.
Also Read: How Safe Is Blockchain?
What Are Crypto Candlestick Charts, and what do they Symbolically Mean?
Candlestick charts for cryptocurrency are by far the most popular. If you’ve ever visited a stock exchange’s website, you’ve probably seen these. Candlestick charts resemble box-and-whisker charts and function similarly to regular graphs. On a candlestick chart, each candle shows the asset’s price changes over a specific period. The opening and closing prices are shown in each candle’s body, while the shadows illustrate how high or low these rising and falling prices have climbed or fallen. Accordingly, bullish and bearish candlesticks, which reflect whether the market is decreasing or strengthening, are represented by green and red candles.
The market moves in three directions.
- The primary movement of a market is referred to as such. It is a vast market trend that can continue anywhere from a year to many years. The primary trend can be either negative or bullish
- The secondary or intermediate movement of a market is referred to as the medium swing. This is what happens over a medium period which might range from 10 days to three months. Trends in the medium swing are measured using the significant price change.
- The term “short-swing” refers to a market’s modest change. The term “short-swing” refers to market speculation that lasts only a few days.
The Three Phases of a Market Trend
The accumulation Phase
This is when informed investors begin purchasing or selling the coin against the market’s common opinion.
The public involvement Phase
Also known as the absorption phase, the public participation phase is when the rest begins to follow experienced investors.
The distribution Phase
Following the hypothesis of the absorption phase, the distribution phase occurs. Investors with a good understanding of the market start to redistribute their holdings.
Cryptographic Charts in a Variety of Time Frames
You may pick from several time frames for bitcoin charts. Specific traders utilize 15-minute graphs, hourly charts, 4-hour charts, and 1-day charts.
If you wanted to start and finish your trade-in one day, you’d look at the short-term charts. If you’re a long-term investor, you’ll want to look at long-period charts.
What Is the Relative Strength Index?
The Relative Strength Index, or RSI, calculates the speed and strength of a market’s price moves by comparing the current price to its prior performance. Overbought is defined as the RSI of a coin approaching or crossing 70. The currency is deemed cheap when the RSI goes below 30. When looking at a currency’s graph, such as an altcoin chart, the RSI ranges from 0 to 100.
The formula looks like this:
RSI = 100 – (100/(1-RS))
What are Support and Resistance?
Support and resistance levels are crucial for analyzing bitcoin candlestick patterns. These are predetermined thresholds that signal the end of a trend. Traders commonly buy at support levels and sell at resistance levels.
A support level is formed when the price of a crypto asset stops falling after crossing a particular barrier. If the sellers maintain their momentum, the price will break through the last support level and construct a new one.
A resistance level is produced when the price of a crypto asset stops growing. If the buyers gain enough momentum, the resistance level can be broken.
As shown in crypto market charts, the price increases when the price rebounds off of a support level and when long traders add more money to the market to enhance their position. Short traders will also try to buy-in. Those who are new to the market may want to wait for a breakthrough at the support level.
You’ll need to know how to read crypto charts if you want to trade cryptocurrency. You must undertake a competent technical analysis based on the Dow Theory to make effective bitcoin trades. Caizcoin has brought secure services to facilitate you. If you can study market effects in this way, you’ll have the best chance of anticipating market movements.
Liquidity refers to the amount of money available for trading at any particular price, whereas volume refers to the total number of genuine deals. The cryptocurrency market grows more liquid as more bitcoin transactions are made.
You may use bitcoin technical analysis to make educated predictions about where the price will go in the short and long term by looking at statistical patterns and last volume and activity – including price movements and swings. The two-word solution to how to understand crypto charts in technical analysis.
A digital asset, i.e., cryptocurrency, is meant to function as a medium of exchange and employs cryptography to safeguard transactions and limit the creation of additional currency units. These currencies are a subcategory of alternative currencies, namely digital currencies.