Why Should You Learn to Read Crypto Candle Charts?
Cryptocurrency has come a long way since 1990, when the first cryptocurrency eCash was invented. Although eCash went nowhere, the second attempt at crypto in 2009 started with Bitcoin and has since grown. You want to learn to read candle charts because candlesticks are useful when trading crypto since they show four important price points.
What Are OHLC Candle Charts?
Short for Open-High-Low-Close charts
Used as a trading tool to visualize price changes for securities, currencies, stocks, bonds, commodities, etc.
Help interpret the day-to-day sentiment of the market and forecast
The x-axis is the timescale
The y-axis shows the price scale
Wicks occur when the prices changes a lot over the period the candle represents
Determine the Time Frame
Look at the x-axis to see the time frame being displayed
This will show how far back the chart goes
Identify the Candle Pattern
Use the color to identify if the cryptocurrency has gone up or down
Green represents price increases
Red or black represents a price decrease
Understand the Candle Pattern
If the candle has a long wick at the top and short wick at the bottom, it means the price rose and fell back down
When the candle has a long wick at the bottom and a short wick at the top, the price fell but then recovered
Determine the Trend
Look at the overall pattern of the candles
Green candles with long wicks shows that the price is trending upward
A series of red candles with long wicks suggests that the price is trending downwards
Look for Support and Resistance Levels
These are the levels that shows that the cryptocurrency has struggled to break through
Look at the areas on the chart where the price has bounced off a certain level
It is important to understand how to read crypto candlestick charts if you are looking to buy and sell cryptocurrency. Remember that practice makes perfect. We would love to help you invest with confidence, so make sure you subscribe to stay on top of our latest educational guides.
Sources
https://www.investopedia.com/tech/were-there-cryptocurrencies-bitcoin/
https://fdar.org/crypto-trading-basics-how-to-read-crypto-candle-charts/
https://www.miamiherald.com/software-business/article274162810.html